What Does an Effective Asset Allocation Strategy Provide to an Investor

question 225

Multiple Choice

What does an effective asset allocation strategy provide to an investor?

• A)An effective diversification strategy
• B)An opportunity to maximize their returns based on appropriate risk
• C)An opportunity to minimize their losses based on appropriate risk
• D)All of the above are correct
• E)All but A are correct.

---

Definitions:

Futures Contracts

Financial derivatives that obligate the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price.

Short-Selling

The practice of selling securities or other financial instruments that are not currently owned, with the intention of repurchasing them at a lower price.

Writing Options

The act of creating an options contract to sell to another party, involving the obligation to buy or sell the underlying asset if the option is exercised.

Risk Lover

An individual or investor who prefers to take more risk in their investments for the possibility of higher returns.