Write 400–600 words that respond to the following questions with your thoughts, ideas, and comments.
In your own words, define the following:
- Common stocks
- Preferred stocks
- Corporate bonds
- Municipal bonds
- American Depositary Receipt (ADR)
Discuss the importance of asset allocation in constructing the investment portfolio. Make sure you address the following:
- Describe asset classes, including stocks, bonds, and cash.
- Explain the percentage of asset classes within the portfolio based on purpose and investor demographics.
- Discuss the stock–bond ratio for a conservative, moderate, and aggressive investor.