For an Investor with a Time Horizon of 4 Years

question 6

Multiple Choice

For an investor with a time horizon of 4 years and higher risk tolerance,an appropriate asset allocation strategy would be

• A) 100% cash
• B) 30% cash, 50% bonds, and 20% stocks
• C) 20% cash, 40% bonds, and 40% stocks
• D) 10% cash, 40% bonds, and 50% stocks
• E) 100% bonds

---

Definitions:

Short Run

The short run in economics refers to a period during which at least one input, such as plant size, is fixed and cannot be changed by the firm.

Competitive Firm

A company operating in a market where it has to compete with other firms for consumers, and has no power to set the price of its products, leading to market-driven pricing strategies.

Monopolistically Competitive Industry

An industry characterized by many firms offering products or services that are similar, but not perfect substitutes, leading to competitive yet differentiated marketplaces.

Nonprice Competition

Strategies used by companies to attract customers through style, service, or location rather than through lower prices.