For an investor with a time horizon of eight years and higher risk tolerance, an appropriate asset allocation strategy would be
A) 100 percent stocks.
B) 100 percent cash.
C) 30 percent cash, 50 percent bonds, and 20 percent stocks.
D) 10 percent cash, 30 percent bonds, and 60 percent stocks.
E) 100 percent bonds.

Question

Quizplus · Accepted Answer

An investor with a time horizon of eight years and higher risk tolerance can afford to invest a significant portion of their portfolio in stocks for higher potential returns over the long run. However, it is still important to have some diversification and risk management with a mix of bonds and cash. A portfolio allocation of 10 percent cash, 30 percent bonds, and 60 percent stocks strikes a balance between growth potential and risk management.

For an Investor with a Time Horizon of Eight Years