Discuss the importance of asset allocation in constructing


Part 1

In your own words, define the following:

  • Common stocks
  • Preferred stocks
  • Corporate bonds
  • Municipal bonds
  • American Depositary Receipt (ADR)

Part 2

Discuss the importance of asset allocation in constructing the investment portfolio. Make sure you address the following:

  • Describe asset classes, including stocks, bonds, and cash.
  • Explain the percentage of asset classes within the portfolio based on purpose and investor demographics.
  • Discuss the stock-bond ratio for a conservative, moderate, and aggressive investor.

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Finance Basics: Discuss the importance of asset allocation in constructing
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