Marti Is 31 Years Old and Is Saving for Retirement

question 34

Multiple Choice

Marti is 31 years old and is saving for retirement. Which one of the following portfolio allocations might best suit her situation if she is willing to accept a fair amount of risk in exchange for long-term capital appreciation?

• A) 60% bonds, 15% money funds and 25% real estate
• B) 5% money funds, 10% bonds and 85% growth stocks
• C) 25% bank CDs, 40% corporate bonds, 15% money market, 20% value stocks
• D) 50% mortgage bonds, 5% money market, 45% municipal bonds

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Definitions:

Forward Rate

An agreed-upon price for a currency or asset to be exchanged at a future date, used for hedging or speculation.

Forward Contract

A financial derivative that represents a customized contract between two parties to buy or sell an asset at a specified price on a future date.

Carrying Value

The book value of assets and liabilities, reflecting their recorded cost minus any depreciation, amortization, or impairment charges.

Spot Rate

The price at which a financial instrument or commodity can be bought or sold for immediate delivery, emphasizing current market value.