Question

Gina Davidson has received $50,000 in a divorce settlement and is trying to decide how to invest it. She has looked at stocks but knows that some stocks have lost a lot of value for their owners recently. What aspect of investing is she most concerned about?

Question 6 options:

A) Diversification

B) Risk

C) Return

D) Liquidity

Answer 1

She is most likely looking at the risk factor, however this will also affect her return. I would go with risk because this is what most troubles her.

Answer 2

Gina is most concerned about B) risk.

Although stocks offer a high return, Gina is put off by the fact that they have the potential for greater losses. This is the risk of the investment, the probability and magnitude of possible losses.