If the markets are efficient, then why is asset allocation still considered important?
A)because the risk-return relationship must still be considered
B)because market timing is critical in efficient markets
C)because individual security selection is the key to the markets being efficient
D)because asset allocation combines market timing with individual security selection
E)because the majority of market gains tend to occur only over long periods of time

Question

Quizplus · Accepted Answer

Even in efficient markets, the risk-return relationship still needs to be considered when constructing a portfolio. Asset allocation allows investors to spread their risk across different asset classes and achieve their desired level of return while managing risk.

If the Markets Are Efficient, Then Why Is Asset Allocation