ECONOMICS
MONEY MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
maximize risk to maximize return.
|
|
|
minimize risk to minimize return.
|
|
|
understand which risks you can afford to take.
|
|
|
allow others to take the risk.
|
Detailed explanation-1: -Risk assessment is an important part of financial planning, and involves understanding, monitoring, and mitigating the various types of risks that could impact investments and returns.
Detailed explanation-2: -Creating an emergency fund is a critical aspect of financial planning. Here, you need to ensure that you have a fund that is equal to at least 6 months of your monthly salary. This way, you don’t have to worry about procuring funds in case of a family emergency or a job loss.
Detailed explanation-3: -The importance of financial planning helps investors achieve their financial goals e.g. home purchase, children’s higher education, children’s marriage, retirement planning, estate planning etc. and long term financial security.
Detailed explanation-4: -It protects your financial status. Similar to the last, your financial status will be safer if you have a plan in place to handle unexpected situations. Many circumstances can impact your finances and risk management will help you ride out those changes.
Detailed explanation-5: -It relates to the odds of money loss. In case of a financial risk, there is a possibility that a company’s cash flow might prove insufficient to satisfy its obligations. Some common financial risks are credit, operational, foreign investment, legal, equity, and liquidity risks.