1) In the aggressive asset allocation approach, an investor _________ .

a. will consider market timing thus includes stock-index futures and bond futures in dividing his portfolio

b. periodically adjusts the weights for each asset category on the basis of market analysis

c. will invests more money in common stocks and foreign securities rather than bond

d. relies heavily on bonds and short term securities in his portfolio design

2). Why the method of geometric average gives a more accurate average stock return as oppose to the method of arithmetic average? Choose the best answer.

a. Geometric average is simpler to use than arithmetic average thus more practical for stock investors.

b. Geometric average tends to over-state average stock return; thus providing a more reliable answer.

c. Geometric average tends to under-state average stock return; thus investor will not fall short of their expectation.

d. Geometric average takes better account of volatility in historical stock returns

3). Although there are arguments that technical analysis is useless, some investors still undertake this endeavor because ___________ .

a. technical analysis can explain market anomalies

b. technical analysis can provide an early forecast on the prospect of stock price movements over time

c. technical analysis can show the correct timing for stock trading

d. a., b., and c.

e. b. and c

4). . In the aggressive asset allocation approach, an investor _________ .

a. will consider market timing thus includes stock-index futures and bond futures in dividing his portfolio

b. periodically adjusts the weights for each asset category on the basis of market analysis

c. will invests more money in common stocks and foreign securities rather than bond

d. relies heavily on bonds and short term securities in his portfolio design

5). Why the method of geometric average gives a more accurate average stock return as oppose to the method of arithmetic average? Choose the best answer.

a. Geometric average is simpler to use than arithmetic average thus more practical for stock investors.

b. Geometric average tends to over-state average stock return; thus providing a more reliable answer.

c. Geometric average tends to under-state average stock return; thus investor will not fall short of their expectation.

d. Geometric average takes better account of volatility in historical stock returns