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Suppose Deborah is choosing how to allocate her portfolio between two asset classes: risk - free government bonds and a risky group of dive stocks.
Suppose Deborah is choosing how to allocate her portfolio between two asset classes: riskfree government bonds and a risky group of dive stocks. The following table shows the risk and return associated with different combinations of stocks and bonds.
tableFraction of Portfolio in Diversified,Average Annual,Standard Deviation of Portfolio ReturnCombinationStocks,tableReturnPercenttablePercentAPercentBCDE
If Deborah reduces her portfolio's exposure to risk by opting for a smaller share of stocks, she must also accept a average annual
Suppose Deborah currently allocates of her portfolio to a diversified group of stocks and of her portfollo to riskfree bonds; that is chooses combination
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