_____ Involves Identifying Opportunities or Domains of Activity That Are

question 23

Multiple Choice

_____ involves identifying opportunities or domains of activity that are of greatest value or importance. Choices:

• A) Selection
• B) Optimization
• C) Compensation
• D) Adaptation

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Definitions:

Investment Growth

The increase in the value of an investment, accomplished through rising asset prices and reinvestment of dividends or interest.

Efficient Frontier

A concept in modern portfolio theory representing the set of portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Risk Tolerance

The level of fluctuation in the returns on investments that an investor can tolerate.

Risk Aversion

A characteristic or trait describing investors who prefer lower returns with known risks rather than higher returns with unknown risks.