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what can be deduced from portfolio a, which is substantially weighted in stocks, whereas portfolio b is weighted evenly between stocks, bonds, and money market funds?

Sagot :

Answer:

Portfolio A, which is heavily weighted in stocks, is inferred to represent a person who is more risk-averse than Portfolio B.

Explanation:

A general trade-off that underlies almost everything where a return can be generated is risk versus reward. Anytime you invest money in something, there is a chance that you won't receive your money back—that the investment may fail—regardless of how big or small.

You anticipate a return in exchange for taking on that risk that makes up for any possible losses. In general, you should receive more money for holding an investment with a higher risk, and less money with a lower risk.

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