You are 40 years old. Your investment portfolio currently consists of: (1) a savings account, with a $16,000 balance, (2) certificates of deposit (CDs) worth $20,000, and (3) an investment portfolio consisting of 40% bonds, 40% equities, and 20% cash and cash equivalents. Your bonds are thirty-year U.S. government bonds, while your equities are made up solely of your employer’s stock. Your cash holdings consist of your savings account and CDs. Your employer’s stock paid a 1% dividend and its market value has increased 10% over the last year. The bonds have paid 3.0% interest. The rate of inflation is 2.5%. Your investment goals are mainly focused on retirement, and you have no large purchases planned in the short term.
The value of your current investment portfolio is (180,000 or 144,000 or 108,000 . This consists of 36,000 or 100,000 or 80,000 in cash and cash equivalents, 108,000 or 72,000 or 54,000 in bonds, and 90,000 or 72,000 or 54,000 in equities.
Given the existing composition of your investment portfolio, how would you characteristic your investment strategy? Is it conservative, moderate, or aggressive?
a. The investment strategy is aggressive.
b. The investment strategy is moderate.
c. The investment strategy is conservative.
