Exam 18: Asset Allocation

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.

The main benefit of diversification is that it reduces the exposure of your investments to the adverse effects of any individual stock.

REITs are classified according to how they invest their money.They include

Proper risk-return management for a firm means that

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

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

The right to sell 100 shares of a specified stock at a specified price by a specified expiration date is called a

When investing outside the United States,stocks are typically ________ U.S.-based stocks.

Stocks in developing countries are generally ________ stocks in developed countries.

Call options are the right to buy stock and put options are the right to sell stock,but both types of options can be either bought or sold.

A good asset allocation plan changes over time.How does it change from mid-life to retirement?

Over time,you should change the composition of your investment portfolio in response to change in your

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

If you anticipate strong economic market conditions,you may want to

In general,the ________ the proportion of your portfolio that is allocated to bonds,the ________ will be your portfolio's overall risk.

Which of the following is not true of REITs?

Stocks from outside the United States have about the same volatility as those from U.S.markets.

The objective of asset allocation is to

Asset allocation is the process of dividing money across financial assets that include all of the following except

Diversification is especially beneficial during periods where the stock market conditions are generally poor.