Which Type of Investor Is Most Likely to Have a Diversified

question 7

Multiple Choice

Which type of investor is most likely to have a diversified portfolio?

• A) risk averse
• B) risk loving
• C) risk neutral
• D) risk tolerant

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Definitions:

IRR Rule

A decision-making tool used in finance to evaluate investments, stating that a project is acceptable if its internal rate of return exceeds a predetermined threshold.

Internal Rate

NO. However, closely related term Internal Rate of Return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments.

Present Value

The value today of a sum promised at a specified time in the future given a rate of interest. The amount that would have to be deposited today at the specified interest rate to grow into the promised sum on the specified date.

Cash Inflows

Money or funds coming into a business from various sources, including sales, investments, financing, and operational activities.