Which statement(s) is/are FALSE about market risk?
I. It is mitigated by writing calls.
II. It includes the risk the investor will lose invested principal.
III. It is the same as systemic risk.
IV. It is mitigated by buying defensive stocks.
A. I only
B. II only
C. II and III
D. III and IV
Correct answer: B
Statement II describes capital risk not market risk.
http://www.investopedia.com/ask/answers/09/series7-070709.asp?partner=pitm12a
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
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