Is it theoretically possible to lower portfolio risk

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Reference no: EM131235196

Assume you have invested half of your wealth in a risk-free asset and half in a risky portfolio P.

Is it theoretically possible to lower your portfolio risk if you move your risk-free asset holdings into another risky portfolio Q?

In other words, can you ever reduce your risk more by buying a risky security than by buying a risk-free asset?

Reference no: EM131235196

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