Choose wisely. There is only one correct answer to each question.
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1.
When a financial advisor says, "Let's talk about risk and how much you can deal with," he or she is talking about _______.
Risk tolerance. Risk tolerance is the amount of risk with which you are comfortable.
2.
Investment portfolios can be called efficient when they ________.
Contain the best possible mixes of assets for a specific risk level and return. Efficiency is relative to the kind of objective that you are trying to fulfill.
3.
The portion of the future over which you will invest is your _______.
Time horizon. Taking your time horizon into consideration will help you determine how to allocate your resources.
4.
By first _______, you can comfortably allocate a desired amount of money to investing.
Taking an inventory of what you own. This will help you figure how much cash you have available to invest.
5.
In investing, taking as many factors as possible into account and then choosing the best course of action is called _______.
Calculated risk. This approach involves taking account of various factors to judge how they will affect your possible choices.
6.
There are mutual funds that change the amounts of their holdings to keep up with market changes.
True. These funds are called asset allocation funds. They use formulas to change their allocations.