Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
What's among the most significant move you can make to alter your long-term returns and volatility?
Reducing your bond and cash investments and increasing 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 can be.
3.
Emerging-market stocks live up to their promise.
False. Although these stocks can be considered aggressive, often the emerging nations behind them have a lot of challenges to overcome. It remains to be seen just how promising they are.
4.
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.
5.
Which type of bond is most like a stock?
Convertible bond. Convertible bonds can be, as their name suggests, converted into stocks. Because of this conversion feature, convertibles behave very much like stocks. They are generally less volatile than stocks, though, because they pay a fixed coupon (or yield).
