Final answer:
Option A, which comprises 60% U.S. stocks, 30% real estate, and 10% stocks in developing countries, is the asset allocation strategy that presents a relatively high risk and high return due to its significant portion in riskier yet potentially higher-return investments.
Step-by-step explanation:
Among the asset allocation strategies provided, the one that subjects an investor to relatively high risk and high return is Option A: 60% U.S. stocks, 30% real estate, 10% stocks in developing countries. This combination contains a significant portion in stocks, which are considered riskier investments but offer the potential for higher returns compared to bonds and certificates of deposit (CDs). The inclusion of real estate and stocks in developing countries also contributes to the potential for high returns, as these markets can offer growth opportunities but come with increased volatility and risk.
The tradeoff between expected return and the degree of risk involved suggests that assets with a higher average return typically compensate for their higher risk. In comparing the other options, B, C, and D contain higher proportions of bonds and CDs, which have lower risk but also lower returns than stocks. Therefore, these allocation strategies are less risky but also offer lower potential returns compared to Option A.