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Which of the following statements reflects the importance of the asset allocation decision to the investment process The asset allocation decision LO 5-3 Helps the investor decide on realistic

      1. Which of the following statements reflects the importance of the asset allocation decision to the investment process? The asset allocation decision: (LO 5-3)

        1. Helps the investor decide on realistic investment goals.

        2. Identifies the specific securities to include in a portfolio.

        3. Determines most of the portfolio’s returns and volatility over time.

        4. Creates a standard by which to establish an appropriate investment time horizon.

Use the following data in answering CFA Questions 4–6.

 

Investment

Expected Return, (r)

Standard Deviation, s

1

.12

.30

2

.15

.50

3

.21

.16

4

.24

.21

 

Investor “satisfaction” with portfolio increases with expected return and decreases with variance according to the “utility” formula: ) 2 ½ where 5 4.

Jun 17 2020 View more View Less

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