If an Investor Has a Risk Tolerance of 8, This

question 28

Multiple Choice

If an investor has a risk tolerance of 8, this means he

• A) is a risk taker.
• B) will accept 8 additional units of variance for an additional 1% expected return.
• C) will accept 1 additional unit of standard deviation for an additional 8% expected return.
• D) will accept 8 units of standard deviation for an additional 1% expected return.

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Definitions:

Operational Planning

The process of creating short-term, detailed steps and allocating resources to achieve the strategic goals of an organization.

Strategic Planning

A systematic process of envisioning a desired future and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them.

Strategic Planning

The process by which an organization defines its strategy or direction and makes decisions on allocating its resources to pursue this strategy.

Intermediate Planning

The process of setting medium-term goals and determining the necessary steps to achieve them, usually positioned between strategic and operational planning.