Asset allocation is the investment strategy pre-decided by the investors to allocate their funds in various investment avenues. Before allocating the assets the strategy is made in such a way that balances the risk and rewards the investor with higher returns.
The risk tolerance is not considered while determining the asset allocation this is because the risk tolerance is the variable of the investment strategy that depends upon the investor.
The risk tolerance may affect the asset allocation but it is not used for determining the asset allocation as it tells how much risk the investor can afford and tolerate psychologically.
The main factors for determining the asset allocation are:
Therefore, option C. is correct.
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