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:

Exchange-Rate Effect

The impact of a change in the relative value of a currency on the economy, particularly on foreign exchange rates and international trade.

Monetary Policy

The process by which a central authority, typically a country's central bank, controls the supply of money in the economy, often targeting an inflation rate or interest rate to ensure economic stability and growth.

Fiscal Policy

Fiscal policy involves government adjustments to its spending levels and tax rates to influence a nation's economy, aiming to stimulate growth or curb inflation.

Aggregate Demand

The total demand for all goods and services within a particular market.