FIN 521 Chapter Notes - Chapter 2: Fiduciary, United States Treasury Security, Tax Bracket

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jademallard37

10 Oct 2012

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The practice of investing funds and managing portfolios should focus primarily on managing risk rather than on managing returns. Asset allocation: the process of deciding how to distribute an investor"s wealth among different countries and asset classes for investment purposes. Asset class: comprised of securities with similar characteristics, attributes, and risk/ return relationships. How individuals structure their financial plans should be related to their age, financial status, future plans, risk aversion characteristics, and needs. Life insurance protects loved ones against financial hardship should death occur before our financial goals are met. On reaching retirement age, the cash surrender value of the life insurance policy can be used for retirement or estate-planning purposes. Health insurance helps to pay additional medical bills. Disability insurance provides continuing income should you become unable to work. Automobile and home (or rental) insurances provide protection against accidents and damage to cars or residences: cash reserve:

Related Questions

What are the key steps in setting and managing Capital Market Expectations and Asset Allocations? Select the best answerâ¦

A. Define which Asset Classes are to be used (and not used), determine expected Risk / Return / Correlations for the Asset Classes, present the conclusions to investment decision-makers, determine weights to hold in each asset class, and implement the allocations.

B. Define which Asset Classes are to be used, determine expected Risk / Return for the Asset Classes, present the conclusions to investment decision-makers, determine percentages to hold in each asset class, implement the allocations, and monitor market and investor conditions for possible changes.

C. Define which Asset Classes are to be used (and not used), determine expected Risk / Return / Correlations for the Asset Classes, present the conclusions to investment decision-makers, determine percentages to hold in each asset class, implement the allocations, and monitor market and investor conditions for possible changes.

		1, 2, 3 and 4.
		1, 2 and 3.
		1 and 4.
		2, 3 and 4.

Which of the following involve the asset allocation decision?

1) What asset classes should be considered for investment?

2) What policy weights should be assigned to each eligible asset class?

3) What are the allowable allocation ranges based on policy weights?

4) What specific securities or funds should be purchased for the portfolio?

pinkclam91

Well Explain Please :

Explain in detail the two fundamental principles of investments â the risk/return tradeoff and diversification. In your response, describe how asset allocation and the correlation of various securities within asset classes impact the riskiness of an investorâs portfolio.

FIN 521 Chapter Notes - Chapter 2: Fiduciary, United States Treasury Security, Tax Bracket

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