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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?

  • True.
  • False.

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.

Continue to Question 9