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QuizMultiple Choice

Building a Diversified Investment Strategy — Quiz

Question 1 • Personal Finance

Why should risk tolerance match investment strategy?

Answer
A
To reduce time horizon
B
To guarantee returns
C
To align decisions with comfort and goals
D
To eliminate taxes

Explanation

Risk tolerance describes how much uncertainty or potential loss you are comfortable accepting. Matching your investment strategy to that comfort level and your financial goals can help you stick with your plan through market changes. It cannot guarantee returns, eliminate taxes, or reduce the time horizon.

AI-written and checked against the verified answer.

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