Which one of the following decisions falls under the category of asset allocation?
A) Purchasing Ford stock rather than General Motors stock
B) Determining that thirty percent of a portfolio should be invested in bonds
C) Adopting a passive investment strategy
D) Deciding to actively analyse individual securities
E) Deciding to use an online broker

Question

Quizplus · Accepted Answer

Asset allocation refers to the process of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. Therefore, determining that thirty percent of a portfolio should be invested in bonds falls under the category of asset allocation.

The other options are not related to asset allocation. A is a decision related to security selection, D is related to active management, and E is related to choosing a broker. C is a decision related to investment strategy but not specifically to asset allocation.

Which One of the Following Decisions Falls Under the Category