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Unformatted text preview: D) identifying market anomalies. E) none of the above. Answer: A Difficulty: Moderate Rationale: A should be the first consideration in asset allocation. B, C, and D refer to security selection. 17. Based on their relative degrees of risk tolerance A) investors will hold varying amounts of the risky asset in their portfolios. B) all investors will have the same portfolio asset allocations. C) investors will hold varying amounts of the risk-free asset in their portfolios. D) A and C. E) none of the above. Answer: D Difficulty: Easy Rationale: By determining levels of risk tolerance, investors can select the optimum portfolio for their own needs; these asset allocations will vary between amounts of risk-free and risky assets based on risk tolerance. Bodie, Investments, Sixth Edition...
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This note was uploaded on 01/31/2010 for the course ECON 3660DE taught by Professor Patrickmartinandvitalialexeev during the Spring '10 term at University of Guelph.
- Spring '10