Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What are the results of your Risk Tolerance Questionnaire? 39 What type of investor are you? High risk Tolerance Be sure to explain what this

  • What are the results of your Risk Tolerance Questionnaire?39 What type of investor are you?High risk Tolerance Be sure to explain what this designation means, and if you feel that your score accurately reflects your personality regarding investing. Your choices are:
  • Money Market mutual fund
  • AAA rated Corporate bond
  • US Government Treasury Bond
  • A Corporate Junk bond
  • A "Blue Chip" stock
  • (An emerging market stock)
  • With this investment philosophy in mind, select one investment from the list above that you feel is the best match for your philosophy. Please explain why you feel this is the best match.
  • Identify an investment that would best suit Samantha's and Martin's level of risk.

Please don't give this answer below!!!!

  • Using a generic risk tolerance calculator, I am an aggressive investor. This means that my willingness and capacity to take risk are high. The factors that influence this are my young age (long time horizon for investment), and my alternate sources of income (I do not depend on investment income for my annual expenses). This reflects my personality regarding investing as I do my own investment research, and am always looking out for new opportunities.
  • The best match for my personality is the emerging market stock. Bond funds and money markets funds do not offer adequately high returns, which is due to their below average risk. Blue chip stocks have higher risk and higher return than bond funds. However, emerging market stock has the highest risk, and also the highest potential return.
  • As Samantha has an above-average risk profile, Blue chip stock is best suited for her. They are high quality stocks with large market capitalization. As Martin is a conservative investor, Money market mutual funds or AAA rated corporate bonds are best suited for him.
  • My investment risk tolerance is higher than Martin and Samantha. The investment advised to Samantha has higher risk, but also higher potential return. This is because she has above-average risk profile. The investment advised to Martin is below-average risk, but offers lower potential returns.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Practices In Local Governments An International Comparison

Authors: Laurence Ferry, Pasquale Ruggiero

1st Edition

180117086X, 978-1801170864

More Books

Students also viewed these Accounting questions

Question

How does a scenario analysis differ from a sensitivity analysis?

Answered: 1 week ago

Question

Design a job advertisement.

Answered: 1 week ago