Exam 18: Asset Allocation

The stocks,bonds,and mutual funds that an investor owns comprise his/her ________.

Asset allocation is the process of allocating money across financial assets,such as stocks,bonds,and mutual funds,with the objective of eliminating risk altogether.

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

Asset allocation uses what to reduce your risk from investing?

A portfolio can reduce risk when its

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

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?

Use the following two columns of items to answer the matching questions below: -asset allocation

As an investor nears retirement,they should begin rotating out of ________ stocks and rotating into ________ stocks,________ stocks,and ________.

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 investments.

To reduce your risk,you should select stocks whose returns exhibit a ________ positive correlation rather than a ________ positive correlation.

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

A(n)________ allows an investor to invest in real estate without owning individual property.

The greater the proportion of stocks to bonds in your portfolio,the greater the ________ risk.

Investors in the early stages of their career path with the need for safety and liquidity should consider money market investments.

The purchasing of stocks in different industries,bonds,and several mutual funds would be a way to ________ your portfolio.

Use the following two columns of items to answer the matching questions below: -negative correlation

Use the following two columns of items to answer the matching questions below: -portfolio

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

In order to add real estate to your investment portfolio,you may buy houses or other real estate directly or you may purchase real estate investment trusts (REITs).