Display problem of undefined entities when saving as xhtml

Dear community,

I am translating xhtml files in Studio 2014 from English to German.

After I have saved the file with Save Target Text As with the same name and xhtml extension, I receive the following error message for all entities that are not defined: e.g. nbsp, all German special characters, n dashes. So, all entities that  are not in the source file.

However, when I save the file with just HTML, the file is rendered fine in several browsers.

I assume that I just have to select the proper setting in the project settings, but I don´t know where that special setting is.

Could you point me to that setting or tell me how my German xhtml file render properly.

Thank you and best regards,

Stefan