Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
How does having a lot of money affect your risk tolerance?
It can enable you to afford loss. If you have a lot of money, you can afford to lose some, and so your risk tolerance will increase.
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.
Mutual fund holdings are allocated to meet certain ________.
Investment goals. With investment goals in mind, mutual fund managers can meet all their other objectives.
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.
The amount of money you have to invest does not play a role in your choice of investments.
False. It plays a role because it alters your investment options and risk tolerance.