Market places 4 part 2

How long you plan to keep your investments in your portfolio refers to:

• Time horizon

• Asset allocation

• Personal financial health

• Risk tolerance

Miguel is 25 years old, has low financial health, a long time horizon and a high risk tolerance. Which asset allocation would you recommend?

• 85% stocks and 15% bonds/cash equivalents

• 60% stocks and 40% bonds/cash equivalents.

• 40% stocks and 60% bonds/cash equivalents.

• 20% stocks and 80% bonds/cash equivalents

Yena is 38 years old, has average financial health, an intermediate time horizon, and an average risk tolerance. Which asset allocation would you recommend?

• 90% stocks and 10% bonds/cash equivalents.

• 65% stocks and 35% bonds/cash equivalents.

• 40% stocks and 60% bonds/cash equivalents.

• 15% stocks and 85% bonds/cash equivalents.

Jason is 58 years old, has strong financial health, a short time horizon, and an average risk tolerance. Which asset allocation you recommend?

• 80% stocks and 10% bonds/cash equivalents.

• 65% stocks and 35% bonds/cash equivalents

• 45% stocks and 55% bonds/cash equivalents

• 25% stocks and 75% bonds/cash equivalents.

What is diversification?

• An investment strategy that mixes a wide variety of investments from different categories within a portfolio.

• How comfortable do you feel taking the risk of losing your money?

• An investment strategy used to analyze company stocks based on their financial statements

• How long you plan to keep your investments in your portfolio.

___________ is an investment strategy that mixes a wide variety of investments from different categories within a portfolio.

• Asset allocation

• Diversification

• Risk tolerance

• Technical analysis

Which of the following statements about diversification is TRUE?

• Diversification is an investment strategy where you invest all your money in one industry

• Diversification helps you analyze how companies are doing in the stock market.

• Diversification guarantees your investment portfolio will be profitable.

• Diversification is an investment strategy that mixes a wide variety of investments from different categories within a portfolio.

A well diversified portfolio needs about 3 to 5 stocks from different categories.

• True

• False

• A well diversified portfolio needs about 3 to 5 stocks from different categories.

• True

• False

A well-diversified portfolio needs about 20-25 stocks from different categories.

• True

• False