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Portfolios 103: How Much Risk Can You Tolerate?

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1.
Learning to tolerate day-to-day gyrations in your portfolio is not helpful for dealing with risks in the longer term.
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False. Most likely, it will help you to put risk into perspective and help you tolerate longer-term risks.
2.
What type of risk do investors overlook most often?
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The risk of not meeting their investment goals. Investors generally notice short-term volatility that's driven by factors such as market risk. As a result, they ignore the greater threat of not meeting their goals.
3.
To help you develop your investment philosophy about volatility and risk, there are several questions you should answer. Of the following, which one would be least helpful?
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What are your stock prices today? This question is not helpful for developing your investment philosophy.
4.
How can you limit market risk?
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Invest in a variety of markets. To limit the risk of one entire market losing money, invest in a variety of markets.
5.
How can you limit company-specific risks?
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Invest in a variety of stocks. To limit the operational and price risk that one company poses, invest in a variety of companies.