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Unformatted text preview: e and government bonds, or separating international stocks and bonds from domestic assets. How do I determine the best asset allocation? Asset classes differ primarily by their average return and the amount of risk. Stocks typically have higher average returns than bonds but also more risk. There are also differences within asset classes: small‐ cap stocks have more risk than large‐cap stocks; corporate bonds have more risk than Government bonds. The basic approach to asset allocation is to determine the appropriate level...
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