Exam 18: Asset Allocation

Your asset allocation decision should not consider

According to the text, many investment advisors recommend ________% of foreign stocks for a diversified portfolio.

Investing in Coke and Pepsico would be an example of

A call option on 100 shares of stock is purchased for a premium of $400. The current price of the stock is $42 per share, and the exercise price is $44 per share. The option is exercised when the stock is selling for $50 per share. What would be your return on the option if after exercising it, you immediately sold the stock at the market price of $50 per share? Ignore taxes and brokerage commissions.

Common stock diversification strategies include diversifying among stocks across industries and among stocks across countries.

Which of the following asset allocation strategies subjects you to relatively high risk and high return?

If you are trying to adequately diversify your portfolio, you would want to avoid investing in stocks that were

If a stock option is never exercised, the return on investment generated is

In constructing a portfolio, you should diversify across several investments.

The more ________ the returns of individual investments in a portfolio, the more ________ the portfolio's returns are over time.

Most investors put a heavy emphasis on stocks at an early stage in life and gradually shift toward bonds or stocks of stable firms that pay high dividends later in life.

If your portfolio consists of 100 shares of Facebook, 100 shares of Twitter, and 100 shares of Google, which of the following statements would be true of your portfolio?

As you fit investing for the future into your personal financial plan, you should consider ________ before investing into long-term assets like stocks and bonds.

REITs are

Stock prices are influenced the most by

When you compile a portfolio, you should include investments that exhibit a high positive correlation.

Use the following two columns of items to answer the matching questions below: -stock option A)stock's susceptibility to poor performance due to weak stock market conditions B)REITs that invest money directly in properties C)an option to purchase or sell stocks under specified conditions D)debt securities E)right to purchase 100 shares of a specific stock at a specific price by a specific date

Ruth paid $300 for a call option on 100 shares of stock. The option gives her the right to buy the stock for $37 per share until April 1. On March 15, the stock rises to $42 per share, and Ruth exercises her option, purchases the stock and then sells it in the market. What is Ruth's return on the option?

A portfolio can be less risky when its investments move in perfect tandem.

Which of the following pairs of stocks seem to offer the most diversification benefits?