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.

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Definitions:

Market Inefficiencies

Situations where resources are not distributed optimally in a market, often leading to a loss in economic or social value.

Pollution Permits

Licenses issued by government authorities that allow holders to emit a specific amount of pollutants over a set period, intending to control and reduce environmental damage.

Supply And Demand

A fundamental economic model describing how the quantity of goods supplied by producers and the quantity demanded by consumers determine the price and quantity of goods and services in a market.

Gas Tax

A government-imposed tax on the sale of gasoline, primarily used to fund transportation infrastructure projects.