Access
The Art of Asset Allocation: Different Asset Classes. Click on the links in the upper left-hand corner and read the pages titled “Asset Classes,” “Stable Value Investments,” “Bonds, Stocks,” and “Historical Performance.” After completing the readings, answer the following questions:

• In what ways are individual securities different from mutual funds?
  
  
• How are stable value and money market investments different from other kinds of investments? Explain one advantage and one disadvantage of investing in stable value or money market investments?
  
  
• How would you describe the asset class called bonds? Explain the relationship between bond prices and interest rates. Explain one important advantage and one important disadvantage of investing in bonds.
  
  
• How would you describe the asset class called stocks? Explain one important advantage and one important disadvantage of investing in stocks.
  
  
• What do we learn about the different asset classes from looking at the page labeled “Historical Performance: 1926-2004?” Based on the chart on this page, what advice would you give to a person about choosing whether to invest in stocks, bonds or mutual funds?