Question

Jennifer Goldman is a middle-aged woman who has recently received a very large divorce settlement.  The most appropriate asset allocation for her would be…

a)        34% equities, 33% bonds and 33% cash

b)        60% equities, 35% bonds and 5% cash

c)         70% equities and 30% bonds

d)        100% equities

Answer 1

Ans) b)  60% equities, 35% bonds and 5% cash

Asset allocation in investing portfolio technique in which aims is to balance risk by dividing asset among various categories such as cash , bonds , equity , derivaties , real estate etc

Jennifer Goldman is middle aged woman and hence she can hold equity for long time. Here aim should be wealth creation, hence equity is prefered class of asset. however equity is very risky and hence to minimize risk it is not advisable to invest 100% in equity.

Thus it is advisable to invest in cash and bond as well, As jennifer is middle aged, she won't need a lot of cash on hand and hence small proportion should be kept in cash , large portion in equity and relatively larger cash cash portion in bonds

Thus it is advisable to keep  60% equities, 35% bonds and 5% cash