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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.
Financial advisors suggest diversifying because putting your money into different investments is often the best way to avoid losing large sums of money.
True. Diversifying spreads risk among several investments.
3.
Having lots of money opens you to a wide choice of investment options.
True. Many investments require a large minimum amount to begin. For example, some bonds are sold in $5,000 minimums.
4.
Why is your age important when you create an investment portfolio?
All of the above. All of these make your age a factor for successful investing.
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.
A mutual fund that changes its holdings as the market itself changes is called a(n) _______ fund.
Asset allocation. Asset allocation funds use formulas to alter the percentages of their holdings as market conditions change.