Asked by Zachary Wages on May 07, 2024
Verified
Asset allocation may involve
A) the decision as to the allocation between a risk-free asset and a risky asset.
B) the decision as to the allocation among different risky assets.
C) considerable security analysis.
D) the decision as to the allocation between a risk-free asset and a risky asset and the decision as to the allocation among different risky assets.
E) the decision as to the allocation between a risk-free asset and a risky asset and considerable security analysis.
Asset Allocation
Allocating a portfolio across broad asset classes such as stocks versus bonds.
Risk-Free Asset
An investment with a guaranteed return and no risk of loss, often exemplified by government bonds of stable countries.
Risky Asset
An investment that holds some risk of losing value, as opposed to a guaranteed or risk-free asset, offering potentially higher rewards in exchange for higher risk.
- Gain insight into the basics of dividing investments between assets that come with risks and those that are deemed secure.
Verified Answer
BR
Brenda RomeroMay 13, 2024
Final Answer :
D
Explanation :
Asset allocation involves both the decision on the mix between risk-free and risky assets, and the allocation among various risky assets to diversify and manage risk.
Learning Objectives
- Gain insight into the basics of dividing investments between assets that come with risks and those that are deemed secure.