Right after college graduation,you open a targeted retirement account,allocating 90% of the funds in domestic and international stocks and 10% in corporate bonds.You plan to shift these allocations to 50% stock and 50% bonds upon retirement.You are now ready for retirement with $8,000,000 in your fund.How much money should you allocate to stocks and bonds?
A)$7,000,000 to stocks and $1,000,to bonds
B)$4,000,000 to stocks and $4,000,000 to bonds
C)$1,000,000 to stocks and $7,000,000 to bonds
D)You cannot answer this question without knowing the current inflation rate.

Question

Quizplus · Accepted Answer

Since the individual plans to allocate 50% to stocks and 50% to bonds upon retirement, and they currently have $8,000,000 in their fund, they should allocate $4,000,000 to stocks and $4,000,000 to bonds. The initial allocation of 90% in stocks and 10% in bonds was meant to generate higher returns over a longer period and the shift to 50% in each is intended to reduce risk as retirement nears.

Right After College Graduation,you Open a Targeted Retirement Account,allocating 90