Combination A Mann As the risk of Ana's portfolio increases, the average annual return on her portfolio 7 . Suppose Ana currently allocates 75% of her portfolio to a diversied 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 5. In order to do so, she must do which of the following? Check all that apply. 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 Stocks (Percent) 25 50 75 100 :1 Place the entirety of her portfolio in bonds :1 Accept a lower average annual rate of return Retu rn (Percent) 1.50 3.50 5.50 7.50 9.50 :1 Sell some of her bonds and use the proceeds to purchase stocks :1 Sell some of her stocks and use the proceeds to purchase bonds within two standard deviations of its average approximately 95% of the time. Suppose Ana modies 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 5.5%, 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 (Risk) (Percent) 0 5 10 1 5 20