Question

A registered representative suggests and then implements a strategy in a client's portfolio. This strategy involves the RR coming up with certain determinations in relation to an appropriate distribution of investments in the client's account and the maintenance of this mix of investments over time. Which of the following most accurately describes the strategy that has been implemented? (A) The RR is using only a technical analysis approach to allocation. (B) The RR is using capital asset pricing model to determine allocation. (C) The RR is using a form of asset allocation for the client. (D) The RR is using a strategy purely focused on diversification for the client.

Answer 1

(C) The RR is using a form of asset allocation for the client.

Step-by-step explanation:

Given that Asset allocation is a term that describes the undertaking of an investment technique. This technique tries to offset risk with reward by diversifying the proportion of each asset in an investment portfolio based on the investor's preference, which is influenced by risk tolerance, and investment period.

Hence, in this situation, the right answer is option C: The RR is using a form of asset allocation for the client.