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Passive Stock Market Investor (PSMI) holds one stock marketindex ETF in his/her portfolio, but has learned that investing in abond market index ETF as well may reduce his/her portfolio risk dueto diversification. The annual returns for both ETFs for the lastten years are listed below. Measured by the standard deviation ofreturns, by how much would PSMI’s portfolio’s historical risk beenreduced if PSMI invested 60% in the stock market index ETF and 40%in the bond market index ETF rather than his current allocation of100% in the stock market index ETF? Enter your answer rounded totwo decimal places. Do not enter % in the answer box. For example,if your answer is 0.12345 or 12.345% then enter as 12.35 in theanswer box. YearStock ETFBond ETF200939.00%5.00%201018.00%6.00%20111.00%8.00%201216.00%4.00%201334.00%-3.00%201413.00%5.00%20150.00%0.00%201613.00%2.00%201721.00%4.00%2018-5.00%0.00%
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