Question

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A portfolio containing 42% equities, 18% real assets, 3% cash and 37% fixed income would be...

A portfolio containing 42% equities, 18% real assets, 3% cash and 37% fixed income would be best described as a

Growth Portfolio

Moderate Portfolio

Conservative Portfolio

Aggressive Portfolio

Solutions

Expert Solution

Choice (b) is correct i.e. Moderate Portfolio

This is certainly a moderate portfolio as the investor by investing 42% in equities is trying to bear the risk associated with investing in stock markets with the expectation of upside potential or higher returns. Simultaneously he is deploying 37% of his/her portfolio in fixed income which will ensure predicted monthly or annual payments. 3% cash is again a good option to have some kind of liquidity and 18% real estate is again a long term investment with the purpose of capital appreciation.

Overall we can say that this is not a conservative portfolio as approx. 60% i.e. 42% in equities and 18% in real estate have been invested which completely states that the investor is willing to take the higher risk for capital appreciation or higher returns.

This is not and aggressive or growth portfolio as the investor is assuring liquidity of approx. 40% i.e. 37% in fixed income and 3% cash.

jeff jeffy answered 2 years ago
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