3
QuizMultiple Choice

Investment Strategy, Risk, and Behavioral Finance — Quiz

Question 3 • Personal Finance

An investor sells after a loss despite choosing a high-risk investment. What does this suggest?

Answer
A
The investor misjudged their risk tolerance.
B
The investment cannot recover.
C
The market guarantees losses.
D
The investor prefers high returns.

Explanation

Choosing a high-risk investment suggests the investor was willing to accept the possibility of losses. Selling after a loss may indicate that the actual risk felt greater than expected, so the investor misjudged their risk tolerance. It does not show that the investment cannot recover or that losses are guaranteed.

AI-written and checked against the verified answer.

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