Before watching the video look through the words in the chart and fill them in the gaps of the following sentences

Steps of Asset Allocation

·  Before watching the video look through the words in the chart and fill them in the gaps of the following sentences:

1.  You are supposed to take a … choice test; it means you have to choose the answer that you think is right from several possible answers that are listed on the question paper.

2.  Life is a complicated thing, sometimes it brings you unexpected surprises and you have to … from your original plan.

3.  It turned out that the stocks Mr. Bell had … performed exactly as he thought and his profits rocketed, unlike Mr. Priestly who … his securities made a bet and had great losses

4.  She made a … that her team would win but unfortunately it lost and she lost as well, I mean all her money.

5.  … is a part of a larger group of related things.

6.  As strange as it may seem silver has … the stock market today

Info before watching:

A capitalization-weighted index is an index whose components are weighted according to the total market value of their outstanding shares. Also called a market-value-weighted index. The impact of a component's price change is proportional to the issue's overall market value, which is the share price times the number of shares outstanding.

The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock market exchanges; the NYSE Euronext and the NASDAQ OMX.

The index focus is now U.S.-based companies only although there are a few legacy companies with headquarters in other countries.[1] Any new companies added to the index are U.S. based, and, when a U.S. company shifts its headquarters overseas, it is replaced by a U.S. company, as happened when Transocean moved from Houston to Switzerland in 2008.[2]

·  Watch the video and answer the following questions:

1.  What information about asset allocation have you learnt from watching the video?

2.  How many asset allocation levels do exist? Name them all.

3.  How do you understand the following  words: “The investor should index his/her portfolio to a particular benchmark”.

4.  Why is the second level of allocation called “strategic” one?

5.  Expalin what investing in the asset class mean

6.  What does sector rotation model consist in?

7.  What differs the last level of asset allocation process from the previous ones?

As a follow-up discuss the following: do you think asset allocation theory is universal or it differs depending… Finish this sentence giving your opinion about the topic.