List Three Different Ways That a Risk-Averse Person Can Reduce

question 163

Essay

List three different ways that a risk-averse person can reduce financial risk.

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Definitions:

Cumulative Feature

A characteristic of certain financial instruments or policies that allows for the accumulation of unpaid amounts or benefits over time.

Preferred Stockholders

Investors who own preferred shares in a company, which typically provide dividends before common stock and have priority over common shareholders in asset liquidation.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, representing the value at which it is issued.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and often pays dividends.