The Prudent Investor Rule Requires

question 34

Multiple Choice

The prudent investor rule requires

• A) executives of companies to avoid investing in options of companies by which they are employed.
• B) executives of companies to disclose their transactions in stocks of companies by which they are employed.
• C) professional investors who manage money for others to avoid all risky investments.
• D) professional investors who manage money for others to constrain their investments to those that would have been approved by the prudent investor.

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Definitions:

Numerically Measurable

Quantifiable or able to be expressed in numerical terms and measured.

Convex

A shape where a line drawn between any two points on the structure will lie outside it, often used in economics to describe preference curves.

Marginal Rates

Rates of tax or charges that apply to the next unit of income or consumption, often increasing with the amount subject to the rate.