Question
The original asset allocation of an investment portfolio was 10% cash, 40% bonds, and 50% stocks. A recent bear market, however, has altered this allocation
The original asset allocation of an investment portfolio was 10% cash, 40% bonds, and 50% stocks. A recent bear market, however, has altered this allocation to 10% cash, 50% bonds, and 40% stocks. The client's investment objectives and risk tolerance have not changed. The adviser recommends that the portfolio be systematically rebalanced by selling:
A) Stocks and buying bonds with the proceeds
B) Bonds and buying stocks with the proceeds
C) Stocks and bonds and placing the proceeds in cash until market conditions stabilize
D) Stocks and bonds and allocating 10% of the portfolio to alternative investments
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