Portfolio Diversification Quiz

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Questions and Answers

What are 2 important things to consider when building and managing your asset allocation?

  • Number of stocks and bonds
  • Time horizon and risk tolerance (correct)
  • Investment returns and expenses
  • Market volatility and economic indicators

For a goal that's 25 years away, what may be appropriate due to the long time horizon?

  • Higher exposure to real estate investment trusts (REITs)
  • Higher exposure to government bonds
  • Higher exposure to domestic and international stocks (correct)
  • Higher exposure to commodities

Why might someone be willing to take on additional risk for a goal 25 years away?

  • Guaranteed high returns in the long term
  • Faster recovery from market declines
  • Assumption of having time to regain lost ground (correct)
  • Lower volatility in the stock market

What may be appropriate for a short-term goal with low risk tolerance?

<p>Higher exposure to bonds and cash equivalents (A)</p> Signup and view all the answers

Why is risk tolerance an important consideration in asset allocation?

<p>To align investment choices with an individual's comfort level (C)</p> Signup and view all the answers

What are the 2 important things to consider when building and managing your asset allocation?

<p>Time horizon and risk tolerance (D)</p> Signup and view all the answers

For a goal that's 25 years away, what might be appropriate due to the long time horizon?

<p>Higher exposure to domestic and international stocks (B)</p> Signup and view all the answers

Why might someone be willing to take on additional risk for a goal 25 years away?

<p>Assuming there's time to regain lost ground in the event of a market decline (A)</p> Signup and view all the answers

What is the benefit of a higher exposure to domestic and international stocks for a long-term goal?

<p>Long-term growth potential (A)</p> Signup and view all the answers

How does time horizon influence risk tolerance in asset allocation?

<p>Longer time horizons may allow for higher risk tolerance (D)</p> Signup and view all the answers

What is business communication?

<p>Communication intended to help a business achieve a fundamental goal (B)</p> Signup and view all the answers

Where does business communication occur?

<p>Internally and externally (B)</p> Signup and view all the answers

What can happen with internal and external forms of communication?

<p>They can come with barriers that prevent the receiver from understanding the information (A)</p> Signup and view all the answers

What does the word 'communication' derive from?

<p>The Latin word communis which implies common (A)</p> Signup and view all the answers

Why is the way people communicate and operate within a business vital?

<p>It is vital to the success of the company in the business world (B)</p> Signup and view all the answers

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