Which of the following asset allocation statements is correct?
A.
A fixed income component of less than 25% is appropriate for conservative portfolios
B.
You should review a client’s asset allocation when the investment environment changes
C.
Portfolio security selection determines the long-term growth potential
D.
Equity weightings greater than 90% should not be recommended
The Answer Is:
B
This question includes an explanation.
Explanation:
Asset allocation should be reviewed when the investment environment changes to ensure it remains suitable for the client’s objectives. The feedback from the document states:
"In general terms, an equity weighting of less than 25% is considered conservative and more than 75% is considered aggressive. Only if the client is very aggressive should the weighting of his equity component reach 90%."