Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
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.
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.
4.
Which type of bond is going to be the least volatile?
Short-term bond. Because the maturity dates of short-term bonds are nearer than those of longer-term bonds, short-term bonds tend to be less volatile. They often yield less, as well. Finally, they usually gain less than longer-term bonds when interest rates fall, but lose less when rates rise.
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.
