Financial Knowledge Assessment: Q8A
8. True or False: Investing with a risk-taking philosophy has the potential to reap substantial financial gain with minimal potential for loss in initial investment?
Explanation: The correct answer is “False.” When and individual is considering an investment, they generally fall under one of three types of investing mentalities. They are: risk-taking; risk-neutral; and risk-averse. Having a risk-taking mentality towards an investment means that you understand that there is both the potential to earn or lose a significant amount of money. This is why the question is “False.” Having a risk-neutral philosophy means that you are neither for nor against taking risk. Having a risk-averse mentality means that you are against all type of risk and are willing to forgo all potential loss for minimal gain.
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