• 95. Explain the role of asset allocation.

    Ans: The role of asset allocation includes the following:

    Distribution of the portfolio betweeen asset classes is referred to as asset allocation . Given the diversity in the factors underlying debt and equity valuation , investors normally benefit by having a  mix of both asset classes. It is an investment strategy that seeeks to balance risk and reward an investor's portfolio by spreading the investment dollars across several different types of investments for potential financial gain.