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Suppose Beth is choosing how to allocate her portfolio between two asset classes: risk - free government bonds and a risky group of diversified stocks.The

Suppose Beth is choosing how to allocate her portfolio between two asset classes: risk-free government bonds and a risky group of diversified stocks.The following table shows the risk and return associated with different combinations of stocks and bondsIf Beth reduces her portfolios exposure to risk by opting for a smaller share of stocks, she also must accept a _____(higher/lower) annual return. Suppose Beth currently allocates 25% of her portfolio to a diversitied group of stocks and 75% of her portfolio to risk free bonds; that is, she choose combination B. She wants to increase the average annual retum on her portfolio from 5.5% to 9.5%. In order to do so, she must do which of the following? Check all that apply:Accoot moro rick- Sell some of her stocks and use the proceeds to purchase bonds- Sell some of her stocks and place the proceeds in a savings account- Sell some of her bonds and use the proceeds to purchase stocks- Accept more riskThe 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 Beth modifies her portiolio to contain 50% of diversified stocks and 50% risk free government bonds; that is, she chooses combination C. The average annual retum for this type of portiolo is 7.5%, 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 ______
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