Asset allocation
A)may involve the decision as to the allocation between a risk-free asset and a risky asset.
B)may involve the decision as to the allocation among different risky assets.
C)may involve considerable security analysis.
D)A and B.
E)A and C.

Question

Quizplus · Accepted Answer

Asset allocation can involve both allocating between a risk-free asset (such as cash or bonds) and a risky asset (such as stocks), as well as allocating among different types of risky assets (such as different stocks or sectors). This decision-making process does require some level of security analysis to assess the potential risks and returns of different assets. Therefore, choices A and B are both correct.

Asset Allocation