ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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your time horizon was relatively short.
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you were highly risk-averse.
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you expected to earn a higher rate of return in exchange for acceptance of the risk.
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all of these
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Detailed explanation-1: -If you have large cash assets and few liabilities, you’re better positioned to take on risk. Modern financial planning utilizes two independent risk scores: risk capacity and risk willingness. Risk capacity is based on your investment objectives, initial investment amount, and time horizon.
Detailed explanation-2: -High-risk investments may offer the chance of higher returns than other investments might produce, but they put your money at higher risk. This means that if things go well, high-risk investments can produce high returns.
Detailed explanation-3: -Risk-the uncertainty that an investment will earn its expected rate of return. To compute the expected rate of return, the investor assigns probability values to all possible returns. These probabilities range from zero (no chance) to one (complete certainty).
Detailed explanation-4: -Simply put, risk tolerance is the level of risk an investor is willing to take.