Exam 18: Asset Allocation

Name two ways to diversify common stock.

A(n) ________ gives you the opportunity to purchase or sell stocks at a set price for a set period of time and is a very risky investment.

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

Bond prices are inversely related to interest rates and are not directly influenced by stock market conditions.

If you find yourself checking the prices of stocks in your portfolio on an hourly basis and you are not a day trader, the most likely cause is

Which of the following is not true of REITs?

Mortgage REITs invest in mortgage loans, while equity REITs invest in real estate stocks or other equities.

Diversification among stocks in different industries will usually avoid fluctuations in stock values due to general economic conditions.

Asset allocation uses ________ to reduce your risk from investing.

Asset allocation should be restricted to stocks because they have the highest potential returns.

If stock prices overall decline in a given month, a well-diversified portfolio will likely experience