ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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put all of your money in an insured savings account.
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avoid stocks because they are too risky.
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avoid buying bonds unless you work for the company
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invest in a mutual fund to spread your risk.
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Detailed explanation-1: -Greater risk tolerance is often synonymous with investment in stocks, equity funds, and exchange-traded funds (ETFs), while lower risk tolerance is often associated with the purchase of bonds, bond funds, and income funds.
Detailed explanation-2: -Risk tolerance refers to the amount of loss an investor is prepared to handle while making an investment decision. Several factors determine the level of risk an investor can afford to take. Knowing the risk tolerance level helps investors plan their entire portfolio and will drive how they invest.
Detailed explanation-3: -Mutual funds are largely a safe investment, seen as being a good way for investors to diversify with minimal risk. But there are circumstances in which a mutual fund is not a good choice for a market participant, especially when it comes to fees.
Detailed explanation-4: -An aggressive investor, or one with a high risk tolerance, is willing to risk losing money to get potentially better results. A conservative investor, or one with a low risk tolerance, favors investments that maintain his or her original investment.