Exam 2: The Asset Allocation Decision

An individual in the 15% tax bracket has $10,000 invested in a tax-exempt IRA account.If the individual earns 8% annually before taxes and inflation is 2.5% per year,what is the real value of the investment in 20 years?

Equity allocations of pension funds in Japan and Germany are similar to those in the United States.

____ phase is the stage when investors in their early-to-middle earning years attempt to accumulate assets to satisfy near-term needs,e.g.,children's education or down payment on a home.

In an investment policy statement the objectives of an investor are expressed in terms of

It is not a good idea to get too specific when constructing your policy statement.

Which of the following is not a step in the portfolio management process?

____ must be stated in terms of expected returns and risk.An investor's tolerance for risk must be established before returns objectives can be stated.