Q214
__________ is the most important investment decision because it determines the risk-return characteristics of the portfolio.
A.
Hedging
B.
Market timing
C.
Performance measurement
D.
Asset allocation
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Asset allocation is the most important investment decision because it determines the risk-return characteristics of the portfolio. Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon.