Choose wisely. There is only one correct answer to each question.
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1.
How aggressive you should be with your investments depends on several things. Which of the following is not one of them?
None of the above. All the factors listed are relevant.
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.
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.
4.
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.
5.
To tone down your foreign investments, consider _______.
Large companies domiciled in developed markets. The stocks of larger foreign companies may not have the same return potential as the stocks of smaller companies or companies domiciled in emerging markets, but they don't have the same volatility, either.
