Go to www.bankrate.com/calculators/retirement/asset-allocation.aspx. This Web site helps you determine an asset allocation strategy based on your specific situation.
a. Adjust the variables until they fit your profile. Click "View Report." What percentage of your portfolio should you invest in each asset class? Are you comfortable with this allocation?
b. Now adjust your tolerance for risk. How does the recommended asset allocation change? Explain why the asset allocation changes the way it does. What happens when you adjust your economic outlook to forecast a weaker economy?