Answer: Less than 2.7%.

The target semideviation (or downside deviation) is calculated using only the returns below the target return (1.0% in this case). Since the standard deviation (2.7%) includes all deviations (both above and below the mean), the target semideviation, which ignores deviations above the mean, will necessarily be less than the standard deviation. Therefore, the correct answer is **A**.

Author: LeetQuiz Editorial Team