Economics, Econometrics and Finance
8 years ago

Optimal bond-stock mix shifts with time for higher investment returns.

Review of Business Research
ASSET ALLOCATION ACROSS INVESTMENT HORIZONS WITH INDEPENDENT RETURNS
Ronald W. Best, Charles W. Hodges, James A. Yoder

Paper Summary

The article explores the best mix of bonds and stocks for different timeframes. They used simulated returns to calculate Sharpe ratios for portfolios with varying bond and stock percentages. The study found that as the investment horizon gets longer, the optimal portfolio includes more bonds.

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