Asked by Arcie Robyn on May 07, 2024
Verified
Just 2 months after you put money into an investment, its price falls 25%. Assuming that none of the investment fundamentals have changed, which of the following actions would evidence the greatest risk tolerance?
A) You sell to avoid further worry and buy something else.
B) You do nothing and wait for the investment to come back.
C) You buy more, thinking that if it was a good investment before, now it's not only good but cheap too.
D) You sue your financial adviser.
Risk Tolerance
The degree of variability in investment returns that an investor is willing to withstand in their investment portfolio.
Investment Fundamentals
The basic factors or considerations, such as earnings, revenue, and market position, that influence the value of an investment.
Financial Adviser
A professional who provides financial services and advice to clients based on their financial situation and goals.
- Recognize the influence of risk tolerance on investment decisions during different stages of life.
Verified Answer
Learning Objectives
- Recognize the influence of risk tolerance on investment decisions during different stages of life.
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