Question

27 multiple choice 10 points scenario jaime has $120,000 to invest and a long - term time horizon. his goal is to beat inflation and he is comfortable with more risky investments. based on his personal goals and risk tolerance, which asset allocation best fits his wishes? 40% bonds; 30% cash; 50% stocks 100% cash 75% stocks; 15% cash; 10% bonds 50% bonds; 30% cash; 20% stocks

Explanation:

Step1: Identify risk & goal match

James wants to beat inflation (needs growth) and accepts more risk. Stocks offer highest long-term growth to outpace inflation, while cash and bonds are lower risk/growth.

Step2: Evaluate each option

• 40% bonds, 10% cash, 50% stocks: Lower stock allocation limits growth potential.
• 100% cash: Cash loses value to inflation, fails goal.
• 75% stocks, 15% cash, 10% bonds: High stock allocation for growth, small cash/bond portion for minimal stability, matches risk tolerance and inflation-beating goal.
• 50% bonds, 30% cash, 20% stocks: Too few stocks to outpace inflation.

Answer:

75% stocks; 15% cash; 10% bonds