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What is allocation?

Allocation refers to the distribution of resources, such as capital or personnel, within a business or investment portfolio. It's a strategic decision made to maximize efficiency, profitability, or to achieve other business objectives.

In a business context, allocation can refer to distributing resources across various departments, projects, or activities based on their strategic importance. In an investment context, allocation refers to the way an investor divides their portfolio across different asset classes like stocks, bonds, and cash equivalents. Proper allocation of resources is essential for optimizing returns and managing risk, whether in a business or investment portfolio.

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