Choose wisely. There is only one correct answer to each question.
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1.
To determine whether your existing portfolio fits your investing blueprint, you should, among other things, search for overlap among your investments.
True. Searching for overlap will weed out unneeded redundancy.
2.
A 40-year-old should put how much money in stocks?
The amount is a matter of personal preference, based on the investors goal for the money. The rule of thumb would suggest that 40-year-olds put 40% of their assets in cash/bonds and the remaining 60% in stocks. But those percentages may be inappropriate, depending on an individual investors goal. Asset allocation is a matter of personal preference.
3.
A portfolio might become riskier over time because _______.
Stocks grow more than bonds and cash. They will take up more and more of your portfolio over time. Since stocks are riskier, they will raise the overall risk level of your portfolio.
4.
You will want to keep tabs on your individual investments in order to make sure theyre _______.
Still filling their original roles in your portfolio. Changes in management, style, and other factors can alter how well your investments are working for you.
5.
Why might it be a good idea to remove redundant investments from your portfolio?
All of the above. Though a set of investments may be redundant, there are still some differences among them, which may make one preferable to keep over the others.
