12
QuizMultiple Choice

Investing

Question 12 • Personal Finance - EL3403

What is the definition of risk?

Answer
A
putting money into more than one investment
B
amount made in profit on an investment
C
using borrowed funds for an investment
D
possibility of losing money on an investment

Explanation

Risk is the possibility that an investment will lose money or produce a worse result than expected. Putting money into several investments is diversification, profit is a return, and using borrowed funds is leverage. Therefore, the definition of risk is the possibility of losing money on an investment.

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