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Suppose Alyssa 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 4.5%, but given the standard deviation of 10%, the returns will typically (about 95% of the time) vary from a gain of .
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Suppose Alyssa modifies her portfolio to contain 50% diversified stocks and 50% risk-free government...
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