If the economic outlook was such that you expected corporate earnings to decline,consumers have excessive levels of debt,and there is significant overcapacity in the technology sector,then an appropriate asset allocation policy would be to:
A) Overweight equity especially technology stocks and underweight bonds
B) Underweight equity especially technology stocks and overweight bonds
C) Overweight equity especially technology stocks and overweight bonds
D) Underweight equity especially technology stocks and underweight bonds
E) None of the above

Question

Quizplus · Accepted Answer

If the economic outlook is negative, it is likely that equity markets will decline, and in this scenario, it is recommended to underweight equity with a particular emphasis on technology stocks. It is also noted that consumers have excessive levels of debt, so it would be wise to overweight bonds as a safer investment option. This approach provides a balance between risk and reward while minimizing the exposure to the technology sector. Therefore, the most appropriate asset allocation policy to adopt would be to underweight equity, especially technology stocks, and overweight bonds.

If the Economic Outlook Was Such That You Expected Corporate