The Fed - Portfolio allocation decisions

5 important questions on The Fed - Portfolio allocation decisions

What must individuals or businesses decide regarding their wealth?

They need to determine how to allocate their wealth among different assets.

What are the characteristics of CASH in portfolio allocation?

It is liquid, but offers low or no return on investment.

What do BONDS and STOCKS offer compared to other assets?

They provide a higher return, but come with increased risk and lower liquidity.
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What is the concept called that involves spreading wealth across different asset types?

This concept is known as portfolio allocation.

What key principle underlies portfolio allocation?

A key principle is Diversification to minimize risk.

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