Question

In: Finance

An investment adviser has decided to purchase a few alternative investments, some stocks, and five bonds...

An investment adviser has decided to purchase a few alternative investments, some stocks, and five bonds with equal amounts invested in each of these three categories. This decision reflects which part of the investment process?

Security selection

Asset allocation

Investment analysis

Portfolio analysis

______ management is best applied when an investor believes that markets are inefficient.

Independent

Passive

Active

Behavioral

Solutions

Expert Solution

It is asset allocation stage.

Asset allocation is the implementation of an investment strategy . Security selection is the process of choosing specific securities within a given asset class that meet screening qualifications.Investment analysis means the process of judging an investment for income.Portfolio analysis is the disciplined process of reviewing portfolio holdings, both individually and in aggregate, for appropriateness and to reduce risks.

From above definitions its clear that it cant be portfolio analysis and investment analysis.

Its is asset allocation because he has decided which assets to invest in. He hasnt gone one step ahead and chosen which specific stocks that he need to buy or which Five bonds to invest in. Therefore, it is not security selection.

Passive management is best applied when an investor believes that markets are inefficient. As it involves less buying and selling and calculated move

jeff jeffy answered 2 years ago
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