For an Investor with a Time Horizon of Five Years

question 46

Multiple Choice

For an investor with a time horizon of five years and moderate risk tolerance, an appropriate asset allocation strategy would be

• A) 100 percent cash.
• B) 30 percent cash, 50 percent bonds, and 20 percent stocks.
• C) 20 percent cash, 40 percent bonds, and 40 percent stocks.
• D) 10 percent cash, 30 percent bonds, and 60 percent stocks.
• E) 100 percent bonds.

---

Definitions:

Specialization

The practice of focusing on a specific area or activity to achieve greater efficiency and productivity.

Production Possibilities

A graphical representation of the alternative combinations of goods and services an economy can produce when all its resources are fully and efficiently utilized.

Specialize

To concentrate on and become expert in a particular subject or skill.

Trade

The exchange of goods, services, or both between two or more parties, either within a country or internationally.