What Rule(s)is (Are)a Good Way to Allocate Your Money

question 74

Multiple Choice

What rule(s) is (are) a good way to allocate your money?

• A)80-10-10 rule.
• B)90-10 rule.
• C)70-30 rule.
• D)Both 80-10-10 and 90-10 are good ways to allocate money.

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Definitions:

Face Value

The original cost of a bond or the principal balance to be paid back at maturity, excluding interest.

Market Interest Rate

The prevailing rate at which interest is charged on loans and bonds in the broader financial market.

Bond Yield

The return an investor realizes on a bond, calculated by the coupon payments relative to the market price of the bond.

Face Value

The nominal or dollar value stated on a financial instrument, such as a bond or stock, representing its worth at issuance or maturity.