Your investment strategy consists of holding 70 percent stocks and 30 percent bonds. You research stocks and bonds in order to find the best performers. You have a(n) _____ asset allocation strategy and a(n) _____ security selection strategy.

Question

Quizplus · Accepted Answer

A passive asset allocation strategy means holding a certain percentage of stocks and a certain percentage of bonds, and not actively changing that allocation based on market conditions or individual security performance. A passive security selection strategy means investing in index funds or ETFs that track a certain market or sector, rather than trying to actively select individual stocks or bonds. Given the information provided, the investor's strategy of holding 70 percent stocks and 30 percent bonds suggests a passive asset allocation strategy, while their research into finding the best performers indicates an active security selection strategy. Therefore, the best choice is D (passive; active).

Your Investment Strategy Consists of Holding 70 Percent Stocks and 30