Asset allocation
A) may involve the decision as to the allocation between a risk-free asset and a risky asset.
B) may involve the decision as to the allocation among different risky assets.
C) may involve considerable security analysis.
D) a and b.
E) a and c.

Question

Quizplus · Accepted Answer

Asset allocation can involve decisions regarding the allocation between a risk-free asset (such as bonds) and a risky asset (such as stocks), as well as decisions regarding the allocation among different risky assets (such as stocks from different industries). It may also involve security analysis to determine the potential risks and returns of different investments. Therefore, options A and B are both correct. Option C is not necessarily a requirement for asset allocation, as it depends on the individual's investment strategy and approach.

Asset Allocation