What Does an Effective Asset Allocation Strategy Provide to an Investor

question 225

Multiple Choice

What does an effective asset allocation strategy provide to an investor?

• A)An effective diversification strategy
• B)An opportunity to maximize their returns based on appropriate risk
• C)An opportunity to minimize their losses based on appropriate risk
• D)All of the above are correct
• E)All but A are correct.

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Definitions:

ETFs

Exchange-Traded Funds, investment funds that are traded on stock exchanges, much like stocks, but hold assets such as stocks, commodities, or bonds.

Front-end Load

A fee paid when purchasing shares of a mutual fund or other investment, typically used to cover commission expenses.

Expense Ratio

A measure depicting the percentage of a fund's assets that are used for administrative and other operating expenses, directly affecting investors' returns.

Mutual Fund

An investment company pooling and managing funds of investors.