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Questions and Answers
Which of the following best describes the difference between saving and investing?
Which of the following best describes the difference between saving and investing?
- Saving is for short-term goals while investing is for long-term goals. (correct)
- Saving is about increasing wealth while investing is about paying for short-term goals.
- Saving is low-risk while investing is high-risk.
- Saving is liquid and safe while investing is less liquid and higher risk.
What is risk tolerance?
What is risk tolerance?
- The possibility of a negative financial outcome.
- The return on an investment.
- The difference between saving and investing.
- The amount of money you can afford to lose in an investment. (correct)
Why is investing considered higher risk compared to saving?
Why is investing considered higher risk compared to saving?
- Investing is less liquid. (correct)
- Investing is safer than saving.
- Investing is for short-term goals.
- Investing has higher returns.
Which of the following is the correct definition of risk-free return?
Which of the following is the correct definition of risk-free return?
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What is the formula for market risk premium?
What is the formula for market risk premium?
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How can risk be managed in investing?
How can risk be managed in investing?
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Which of the following best describes the relationship between risk and return in investing?
Which of the following best describes the relationship between risk and return in investing?
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What is the main purpose of asset allocation in managing risk?
What is the main purpose of asset allocation in managing risk?
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Which of the following is NOT one of the risk tolerance factors mentioned in the text?
Which of the following is NOT one of the risk tolerance factors mentioned in the text?
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What is the best strategy for long-term investing, according to the text?
What is the best strategy for long-term investing, according to the text?
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