You determine that the appropriate balance for your investment-risk tolerance is a 70-20-10 proportion (stocks,bonds,and cash).After the first year,your $10,000 investment has doubled in value to $20,000,with $16,000 in stocks,$2,750 in bonds,and $1,250 in cash.How should your assets be allocated to retain your risk proportions?
A)Sell $2,000 in stocks,buy $1,250 in bonds,and add $750 in cash
B)Sell $1,000 in stocks,buy $2,250 in bonds,and add $750 in cash
C)Buy $1,000 in stock,sell $2,250 in bonds,and reduce cash by $750
D)Buy $2,000 in stock,sell $1,250 in bonds,and reduce cash by $750

Question

Quizplus · Accepted Answer

To maintain a 70-20-10 allocation on $20,000, you need $14,000 in stocks, $4,000 in bonds, and $2,000 in cash. Selling $2,000 in stocks, buying $1,250 in bonds, and adding $750 in cash will achieve this balance.

You Determine That the Appropriate Balance for Your Investment-Risk Tolerance