Academic Research Shows Asset Allocation Decisions Explain Approximately 90% of the Variation

question 17

True/False

Academic research shows asset allocation decisions explain approximately 90% of the variation in returns in a portfolio,whereas individual security analysis,including "stock picking," explains only about 10%.

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Definitions:

Inflation

The measure of how quickly the general price level for products and services grows, resulting in reduced consumer purchasing ability.

Money Supply Growth Rate

The rate at which the amount of money available in an economy grows, influencing inflation and economic activity.

Natural Rate of Unemployment

The level of unemployment consistent with a stable rate of inflation, determined by the structure of the labor market.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.