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Asset allocation is the decision of how you divide your investment portfolio between various assets. Typical asset categories include cash or short- term securities (Treasury bills, CDs, etc.), bonds (municipal bonds, corporate bonds, etc.), and equity funds or equities (stocks, stock mutual funds, etc.) The following table illustrates several model portfolios that you can use as a basis for your own investment plan, depending on such factors as your time horizon, risk tolerance, and investment philosophy Model Portfolios and Time Horizons Risk Tolerance/Investment Philosophy 0-5 Years 6-10 Years High Risk/ Aggressive 10% Cash 20% Bonds 30% Bonds 80% Equities 60% Equities 11+ Years 100% Equities Moderate Risk/Moderate 20% Cash 10% Cash 40% Bonds 20% Bonds 80% Equities 30% Bonds 40% Equities 60% Equities Low Risk/Conservative 35% Cash 10% Cash 20% Cash 40% Bonds 30% Bonds 40% Bonds 25% Equities 40% Equities 60% Equities Suppose that Sarah is a single parent who would like to save some money for her daughter's college education. Her daughter is currently 10 years old and will begin college in approximately 8 years. Although Sarah would like her daughter's college savings to grow, she is also concerned about Investing an entire portfollo into the stock market. However, she is comfortable with a medium level of risk for the sake of achieving same level of growth. Sarah is Investor with a time horizon of Using the model portfolios provided, what is the ideal asset allocation for Sarah's portfolio, based on her time horizon and investment philosophy? 60% Equities Moderate Risk/Moderate 20% Cash 10% Cash 20% Bonds 30% Bonds 80% Equities 40% Bonds 40% Equities 60% Equities Low Risk/Conservative 35% Cash 20% Cash 10% Cash 40% Bonds 40% Bonds 30% Bonds 25% Equities 40% Equities 60% Equities Suppose that Sarah is a single parent who would like to save some money for her daughter's college education. Her daughter is currently 10 years old and will begin college in approximately 3 years. Although Sarah would like her daughter's college savings to grow, she is also concerned about 8 investing an entire portfolio Into the stock market. However, she is comfortable with a medium level of risk for the sake of achieving some level of growth, Sarah is Investor with a time horizon of Using the model portfolios provided, what is the ideal asset allocation for Sarah's portfolio, based on her time horizon and investment philosophy? If no funds are recommended to be allocated toward an asset enter "o" into the numeric entry box for that asset Recommended asset allocation for Sarah's portfolio: Cash: Bonds: Equities: If you In general, if you have a longer time horizon and a higher risk tolerance, then a higher percentage of your portfolio should be in are investing for a shorter time horizon, or if you have a more conservative Investment philosophy, then you should Invest a greater percentage of your portfolio in