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Personal finance questions

Which of the following statements about diversification is NOT accurate:

		a strategy of considering the correlation between different investments
		it is a strategy of spreading your invested money across more than one investment
		an investment approach that is too complicated to effectively apply for the average person
		not a way to avoid risk altogether, but a way to balance the likelihood of losses with gains

The return-risk relationship means

		exchange for a higher potential rate of return, an investor will face greater uncertainty
		a diversified mutual fund will have low risk
		investment that is higher risk guarantees a higher return
		the downside of risk is all that really matters to investors

What is the primary purpose, or desired outcome, of investing money?

		to learn more about another aspect of the financial system
		the thrill of risk
		to earn a return
		to contribute to healthy economy

Which of the following statements does NOT appropriately reflect factors considered in diversification:

		types of investments
		assessed risk and/or volatility character of the investment
		amounts of money invested, most money in one investment vs only a little money invested elsewhere
		companies, industries and countries

When expressing a return, it is important to factor in some important context, such as:

		all of the factors noted here would be important context to better understand the return that has been earned
		the amount of time it took to earn the return, typically adjusting to be shown annuallly
		the amount of money the return was earned on, also known as principal
		any fees or taxes that would reduce the overall return, or other streams of income the investment generated which would increase the overall return

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