The fixed-weightings approach to asset allocation A) is based on an allocation o

Question

The fixed-weightings approach to asset allocation

A) is based on an allocation of an equal percentage of the portfolio to each separate asset category.

B) requires periodic rebalancing of the portfolio to maintain the desired weights.

C) is based on periodic adjustments to category weights in response to market changes.

D) uses stock-index futures and bond futures in a market timing strategy.

2) Fred and Martha are in their seventies and retired. Which one of the following sets of portfolio statistics might best suit their situation if their primary investment goal is current income with limited risk?

A) beta of 0.83 and a dividend yield of 6.3%

B) beta of 0.86, and a dividend yield of 4.6%

C) beta of 1.6 and a dividend yield of 6.4%

Explanation / Answer

Fixed weightings to asset allocation is based on periodic adjustments to category weights in response to market changes .

Beta of 0.83 and a dividend yield of 6.3% is the situation that suits the best to fred and martha becuase the risk will be very low and current income will be very high

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