Choose wisely. There is only one correct answer to each question.
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1.
How conservative you should be with your investments depends on what?
Your investment goal, your investment horizon, and your ability to handle volatility. Your goal, time horizon, and volatility tolerance should all help determine how conservative your portfolio is.
2.
Short-term bonds are less volatile than intermediate-term bonds.
True. This is due to their shorter maturities.
3.
Which of the following companies would NOT lessen the volatility of your portfolio?
Very small companies. Very small companies tend to grow quickly, and that makes them volatile -- too volatile for a conservative portfolio.
4.
The stock of which foreign company would be the least volatile?
A large manufacturer. As a rule, the large companies would be the least volatile.
5.
Why should tilting your portfolio toward larger-company stocks and away from smaller-company stocks curtail its volatility?
Because larger companies growing at a slower rate should be less volatile than smaller companies growing at a faster rate. The faster the growth and the smaller the company, the more volatile the stock. If curtailing volatility is your goal, focus the U.S. stock portion of your portfolio on the very largest companies.
