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1.
To dampen volatility in your foreign investments, focus on small international companies in developed markets.
False. You should focus on large companies, not small ones.
2.
Why are short-term bonds a good fit for a conservative portfolio?
Because they have short maturities, they are less volatile. Thus, short-term bonds are often advised for anyone wanting to make his or her portfolio more conservative.
3.
Short-term bonds are less volatile than intermediate-term bonds.
True. This is due to their shorter maturities.
4.
Stocks trading at prices that are in line with their earnings, sales, or cash flows would help keep a portfolio conservative.
True. Stocks of this nature tend to have relatively low price risk, which helps dampen a portfolio's volatility.
5.
What's the most significant move you can make to damp your long-term volatility?
Increasing your bond and cash investments and decreasing your position in stocks. Your blend of cash, stocks, and bonds likely contributes more to your portfolio's return and volatility than what investment styles you practice, what sectors you have exposure to, and what individual securities you choose. The more of your portfolio you have in stocks and the less you have in bonds and cash, the more intense your portfolio's performance will be.
