Question
You determine that the appropriate balance for your investment-risk tolerance is a 79-15-6 proportion (stocks, bonds, and cash). After the first year, your $38,000 investment
You determine that the appropriate balance for your investment-risk tolerance is a 79-15-6 proportion (stocks, bonds, and cash). After the first year, your $38,000 investment has doubled in value to $76,000, with $60,800 in stocks, $10,800 in bonds, and $4,400 in cash. How should your assets be allocated to retain your risk proportions?
a) Sell $760 in stocks, buy $600 in bonds, and add $160 in cash
b) Sell $380 in stocks, buy $300 in bonds, and add $80 in cash
c) Buy $380 in stock, sell $300 in bonds, and reduce cash by $80
d) Buy $760 in stock, buy $600 in bonds, and reduce cash by $160
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