As the risk of Yvette's portfolio increases, the average annual return on her portfolio

Suppose Yvette currently allocates $75\%$ of her portfolio to a diversified group of stocks and $25\%$ of her portfolio to risk$-$free bonds; that is$,$ she

chooses combination D$.$ She wants to reduce the level of risk associated with her portfolio from a standard deviation of $15$ to a standard deviation of

In order to do so$,$ she must do which of the following? Check all that apply.

Accept a lower average annual rate of return

Sell some of her stocks and use the proceeds to purchase bonds

Sell some of her bonds and use the proceeds to purchase stocks

Place the entirety of her portfolio in bonds

The table uses the standard deviation of the portfolio's return as a measure of risk. A normal random variable, such as a portfolio's return, stays

within two standard deviations of its average approximately $95\%$ of the time.

Suppose Yvette modifies her portfolio to contain $50\%$ diversified stocks and $50\%$ risk$-$free government bonds; that is$,$ she chooses combination C$.$ The

average annual return for this type of portfolio is $10\%,$ but given the standard deviation of $10\%,$ the returns will typically $($about $95\%$ of the time$)$

vary from a gain of

to a loss of