Suppose Alyssa 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 5. In order to do so, she must do which of the following? Check all that apply.
- Sell some of her stocks and use the proceeds to purchase bonds
- Place the entirety of her portfolio in bonds
- Accept a lower average annual rate of return
- Sell some of her bonds and use the proceeds to purchase stocks