Question
You determine that the appropriate balance for your investment-risk tolerance is a 76-20-4 proportion (stocks, bonds, and cash). After the first year, your $42,000 investment
You determine that the appropriate balance for your investment-risk tolerance is a 76-20-4 proportion (stocks, bonds, and cash). After the first year, your $42,000 investment has doubled in value to $84,000, with $67,200 in stocks, $14,000 in bonds, and $2,800 in cash. How should your assets be allocated to retain your risk proportions?
Sell $3,360 in stocks, buy $2,800 in bonds, and add $560 in cash
Sell $1,680 in stocks, buy $1,400 in bonds, and add $280 in cash
Buy $1,680 in stock, sell $1,400 in bonds, and reduce cash by $280
Buy $3,360 in stock, buy $2,800 in bonds, and reduce cash by $560
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