Bob and Mary Martin Are Both 32 Years Old

question 14

Essay

Bob and Mary Martin are both 32 years old.Although they graduated from college almost 10 years ago,they have never developed a diversified investment program.What extra money they had was invested in high-tech stocks that did quite well until the last five years.Then,with the economic downturn,they encountered major losses.How could asset allocation have reduced the dollar amounts of the Martins' losses?

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Definitions:

Acid Chloride

Organic compounds derived from carboxylic acids by replacing the hydroxyl group with a chlorine atom, making them highly reactive acylating agents.

Anhydride

A compound formed from another compound by the removal of a molecule of water; commonly associated with carboxylic acid anhydrides in organic chemistry.

Nitrile

Organic compounds that contain a cyano group (-C≡N) attached to an alkyl group, used in the manufacture of rubbers, resins, and pharmaceuticals.

Amide

Organic compounds characterized by a carbonyl group attached to a nitrogen atom, often found in proteins and other important biological molecules.