Why Should You Approach Every Problem by Drawing a Timeline

question 78

Multiple Choice

Why should you approach every problem by drawing a timeline?

• A)Timelines allow you to quickly sum cash flows over time.
• B)Timelines eliminate the majority of flawed financial decisions.
• C)Timelines can be used to schedule events which are yet to occur.
• D)Timelines identify events in a transaction or investment which might otherwise be easily overlooked.

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Definitions:

Volatility

The degree of variation of a trading price series over time, usually measured by the standard deviation of returns.

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean.

Diversification

An investment strategy that reduces risk by allocating investments among various financial instruments, industries, or other categories.

Negatively Correlated

A relationship between two variables in which one variable increases as the other decreases.