Question

An investor receives a return from an investment due to: Group of answer choices recurring deposits....

An investor receives a return from an investment due to:

Group of answer choices

recurring deposits.

asset allocation among different asset classes.

rebalancing by buying more equities.

capital gains on the sale of an investment.

diversification among or within asset classes.

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Answer #1

An investor receives a return from an investment due to capital gains on the sale of an investment.

Option D is correct.

The sale of an investment results in a capital gain and the investor receives the proceeds of the investment. The gain is the return.

Option A is incorrect because recurring deposits reinvest the interest.

Option B is incorrect because asset allocation among different asset classes results in diversification.

Option C is incorrect because rebalancing by buying more equities results in keeping the weights of each stock at a desired level.

Option E is incorrect because diversification among or within asset classes reduces risk.

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