An Active Asset Allocation Strategy Involves _________

question 78

Multiple Choice

An active asset allocation strategy involves _________.

• A) investing in the stock of companies which are price takers
• B) maintaining approximately the same proportions of a portfolio in each asset-class over time
• C) varying the proportions of a portfolio in each asset-class in response to changing market conditions
• D) selecting individual securities in different sectors that are believed to be undervalued

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Definitions:

Investment

The act of distributing funds or resources in anticipation of earning profits or income.

Interest

The fee earned from lending money or the cost incurred for borrowing money, often expressed as an annual percentage rate.

Interest Rate

The part of a loan that incurs interest charges for the borrower, usually shown as an annual percent of the outstanding loan.

Investment

Allocating resources, such as capital or time, with the expectation of generating an income or profit.