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1.
Why may tilting your portfolio toward growth stocks theoretically alter its performance?
Because companies that are growing at a decent rate should outperform companies growing at a slower rate. Over time, a stock's price follows its earnings. As a result, companies that are growing at a decent rate should outperform those companies growing at a slower rate.
2.
To alter your foreign investments, consider _______.
Smaller companies. As in the United States, foreign mid- and small-company stocks theoretically have a growth edge over their larger counterparts. Emerging-markets stocks are also an option for aggressive investors.
3.
According to many financial professionals, what contributes the most to your portfolio's return and volatility?
Your blend of investments. In other words, your asset allocation is what matters more than anything else.
4.
What type of bond would be the least volatile part of an aggressive portfolio?
Short-term bond. Short-term bonds are the least volatile of these options.
5.
Which of the following groups of stocks provides the most opportunity for growth?
Small-company stocks. As a general rule, smaller companies are growing faster than medium or large companies.
