Basics Beginner: Creating a Portfolio

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
How does having a lot of money affect your risk tolerance?
Choose wisely. There is only one correct answer.
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.
2.
The amount of money you have to invest does not play a role in your choice of investments.
Choose wisely. There is only one correct answer.
False. It plays a role because it alters your investment options and risk tolerance.
3.
Financial advisors suggest diversifying because putting your money into different investments is often the best way to avoid losing large sums of money.
Choose wisely. There is only one correct answer.
True. Diversifying spreads risk among several investments.
4.
Mutual fund holdings are allocated to meet certain ________.
Choose wisely. There is only one correct answer.
Investment goals. With investment goals in mind, mutual fund managers can meet all their other objectives.
5.
The portion of the future over which you will invest is your _______.
Choose wisely. There is only one correct answer.
Time horizon. Taking your time horizon into consideration will help you determine how to allocate your resources.
6.
Investment risk is the risk that one may never have enough resources to begin investing.
Choose wisely. There is only one correct answer.
False. Investment risk is the chance of loss due to the uncertainty of future events.