ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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you got bonus cash because your teacher registered early.
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additional funds were provided in anticipation of inflation.
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Of a rise in value of the US dollar on the currency market.
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The cash in your portfolio has been earning interest.
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Detailed explanation-1: -Cash and cash equivalents can provide liquidity, portfolio stability and emergency funds. Cash equivalent vehicles include savings, checking and money market accounts, and short-term investments. A general rule of thumb is that cash and cash equivalents should comprise between 2% and 10% of your portfolio.
Detailed explanation-2: -Reduced Portfolio Volatility Holding cash in a portfolio may reduce returns as markets appreciate, but its stable value can serve as an anchor within a portfolio to limit losses during declines. For example, a 20% market decline in a fully invested portfolio results in a loss of 20%.
Detailed explanation-3: -Having some percentage of your portfolio in cash can allow you to take advantage of investment opportunities as they arise. A cash allocation may come in handy if you wish to overweight or underweight certain asset classes in your portfolio based on your outlook for the markets.
Detailed explanation-4: -Index Funds, Mutual Funds and ETFs. Individual Company Stocks. Real Estate. Savings Accounts, MMAs and CDs. Pay Down Your Debt. Create an Emergency Fund. Account for the Capital Gains Tax. Employ Diversification in Your Portfolio. 01-Mar-2023