INV DB 2

400 words

Part 1

In your own words, define the following:

• Common stocks
• Preferred stocks
• Corporate bonds
• Municipal bonds
• American Depositary Receipt (ADR)

Part 2

Discuss the importance of asset allocation in constructing the investment portfolio. Make sure you address the following:

• Describe asset classes, including stocks, bonds, and cash.
• Explain the percentage of asset classes within the portfolio based on purpose and investor demographics.
• Discuss the stock–bond ratio for a conservative, moderate, and aggressive investor.