Series 7 practice questionhardPortfolio Management 646
Asset allocation is best described as:
- Aselecting only the highest-yielding bonds
- Btiming every market turn perfectly
- Ctrading exclusively on chart breakouts
- Ddividing investments among asset classes to manage risk and return✓ Correct answer
Explanation
Why D — dividing investments among asset classes to manage risk and return
Asset allocation spreads investments among categories such as stocks, bonds, and cash equivalents. It is a core portfolio management technique for balancing risk and expected return.
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