Which of the following are examples of Asset Allocation? i. I allocate 20% of my wealth to stocks and 80% of my wealth to corporate bonds. ii. Out of all the money I put in the stocks category, I invest 50% in Apple and 50% iii. I allocate 100% of my wealth to crypto currency. O (i) and (iii) only O (ii) and (iii) only
Assets Allocation:
Asset allocation is the process of dividing up financial resources among various assets, such as cash, stocks, bonds, mutual funds, real estate, etc., with the aim of balancing risk and return.
Investors depending on the objectives to be achieved in the future put money in different kinds of investments and it depends on the return on investment they require.
Asset allocation is the process of choosing the right combination of several asset classes (cash, bonds, stocks, etc.) for a portfolio.
The portfolio will be extremely dangerous if the money is entirely invested in stocks, as stocks have a higher level of risk than other assets like bonds and other fixed-income products.
A good asset allocation will include bonds, real estate, mutual funds, and so on.
A portfolio should contain all different kinds of assets to diversify risk.
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