Suppose Frances 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 bonds. Fraction of Portfolio Average Standard Deviation of
in Diversified Stocks Annual Return Portfolio Return (Risk)
Combination (Percent) (Percent) (Percent)
A 0 2.00 0
B 25 4.50 5
C 50 7.00 10
D 75 9.50 15
E 100 12.00 20
If Frances reduces her portfolio's exposure to risk by opting for a smaller share of stocks, he must also accept a average annual return.
Suppose Frances currently allocates 25% of her portfolio to a diversified group of stocks and 75% of her portfolio to risk-free bonds; that is, she chooses combination B. She wants to increase the average annual return on her portfolio from 4.5% to 9.5%. In order to do so, she must do which of the following?
a. Sell some of her stocks and place the proceeds in a savings account
b. Sell some of her bonds and use the proceeds to purchase stocks
c. Sell some of her stocks and use the proceeds to purchase bonds
Accept more risk
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 within two standard deviations of its average approximately 95% of the time.
Suppose Dina modifies her portfolio to contain 75% diversified stocks and 25% risk-free government bonds; that is, she chooses combination D. The average annual return for this type of portfolio is 4.5%, but given the standard deviation of 15%, the returns will typically (about 95% of the time) vary from a gain of34.5% to a loss of___.

Table 1. shows the expected demand for the dvd at different suggested donation levels, and they can act as a single-price monopolist if they choose to. thereceipts will be used to fund gstcg supplies for their data collection and conservation work. at the end of each sea turtle nesting season, any excess funds are donated by the gstcg to a local non-profit sea turtle research and rehabilitation facility. table 1 suggested anticipated total marginal profit donation per number of dvd revenue revenue dvd request requests $19.00 0 $15.00 2 $9.50 4 $7.75 10 $3.00 15 $0.00 20 a. complete table 1 by computing the total revenue, marginal revenue, and profit columns. b. the president wants the gstcg to provide videos to generate the most possible donations (total revenue). what price, if any, is the president of the gstcg favoring and how many people will receive the dvd if this becomes the price of the suggested donation? explain your answer. c. the education outreach committee wants the gstcg to provide videos to the highest possible number of people. what price, if any, is the educational outreach committee favoring and how many people will receive the dvd if this becomes the price of the suggested donation? explain your answer. d. the treasurer of the gstcg wants the dvd program to be as efficient as possible so that the marginal revenue equals marginal cost. what price, if any, is the treasurer favoring and how many people will receive the dvd if this becomes the price of the suggested donation? explain your answer. e. the fundraising committee wants the dvd program to generate as much profit in donations as possible. what price, if any, is the fundraising committee favoring and how many people will receive the dvd if this becomes the price of the suggested donation? explain your answer.