Gibson (2000) Studied the Effects of Using Multiple Asset Classes

question 7

Multiple Choice

Gibson (2000) studied the effects of using multiple asset classes (2, 3 or 4 asset classes) for portfolio investing. He concluded that:

• A) by using a combination of all 4 asset classes over a period of time an investor would achieve the highest long-term average return but it would have a higher level of risk than other asset class combinations.
• B) by using a combination of 3 asset classes over a period of time an investor would achieve the highest long-term average return with a lower level of risk than other asset class combinations.
• C) by using a combination of 2 asset classes over a period of time an investor would achieve the highest long-term average return with the lowest level of risk.
• D) by using a combination of all 4 asset classes over a period of time an investor would achieve the highest long-term average return with a lower level of risk than other asset class combinations.

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Definitions:

Corporate Profitability

A measure of an organization's efficiency in generating profit from its operations.

Social Activity

Participation in events or interactions with others that provide enjoyment, leisure, or cultural experiences, often conducive to fostering relationships.

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A business approach that contributes to sustainable development by delivering economic, social, and environmental benefits for all stakeholders.

Moral Minimum

The concept that businesses should at least avoid causing harm and engage in ethical behavior that meets a basic level of moral conduct.