Asset allocation is an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. Asset allocation is an important factor in determining returns for an investment portfolio. Asset allocation is based on the principle that different assets perform differently in different market and economic conditions.

i) Using relevant examples, explain four Asset Classes available in your country [8 marks]

ii) Distinguish between Strategic Asset Allocation strategy and Tactical Asset Allocation strategy [8 marks]

iii) The long-run behavior of an asset class may not guarantee its short-term behavior. Explain this statement [4 marks]

iv) How can an investor at the Nairobi securities exchange apply active Portfolio management strategy [5 marks]

NOTE: ANSWER AS ONE QUESTION