A:

If a client has a very low risk tolerance, all of the following might be suitable investments EXCEPT:

a. Growth stock funds
b. Money market funds
c. Short-term corporate bonds
d. Certificates of deposit


The correct answer is "a": growth stock funds may not be appropriate for an investor with a very low risk tolerance.

RELATED FAQS
  1. All of the following are regulated by the Investment Companies Act of 1940 EXCEPT

    a) closed-end funds.b) private investment funds.c) mutual funds.d) unit investment trusts. Answer: B.Also called hedge funds, ... Read Answer >>
  2. How do I find out my own risk tolerance?

    Learn why risking capital can be risky business, how much risk can you afford and how to determine the right amount of risk ... Read Answer >>
  3. All of the following statements about convertible bonds are FALSE EXCEPT:

    A. If all of the bonds are converted, the stockholders will benefit.B. They depreciate when the stock rises in value.C. They ... Read Answer >>
Related Articles
  1. Financial Advisor

    Risk Tolerance: Why Advisors, Investors Mess It Up

    Quantifying the amount of risk that a client is willing to take can be a deceptively difficult task. Here's why.
  2. Financial Advisor

    Pro Tips on Evaluating Clients' Risk Tolerance

    Want to keep clients longer? Bolster your risk assessment capabilities.
  3. Tech

    Tips for Assessing a Client's Risk Tolerance

    Determining a client’s risk tolerance is a critical piece of the puzzle in designing and appropriate asset allocation.
  4. Investing

    Understanding Risk Tolerance

    Risk tolerance measures the degree to which an investor will accept risk in exchange for a better return.
  5. Trading

    What Is Your Risk Tolerance?

    Forget the cliches and uncover how much volatility you can really stand.
  6. Investing

    Investing Within Your Risk Tolerance Comfort Zone

    Investing within your risk tolerance comfort zone can keep you from making bad decisions.
  7. Financial Advisor

    The Importance of a Client's Risk Assessment

    Financial advisors and money managers must do a detailed risk assessment regarding each client before they can recommend a course of action.
  8. Financial Advisor

    When Are Mutual Funds Right for Your Client?

    Find out what factors determine whether mutual funds are right for your client, including risk tolerance, investment goals and tax implications.
  9. Investing

    Matching Investing Risk Tolerance To Personality

    Understanding risk tolerance is crucial to the advisor/client relationship and any good investment policy statement.
RELATED TERMS
  1. Suitable (Suitability)

    A situation (and sometimes a legal requirement) that an investment ...
  2. Risk Tolerance

    The degree of variability in investment returns that an individual ...
  3. Blanket Recommendation

    A situation in which a financial professional or institution ...
  4. Position Sizing

    The dollar value being invested into a particular security by ...
  5. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment ...
  6. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
Hot Definitions
  1. Money Market

    A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. ...
  2. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network is permanently recorded.
  3. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
  4. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
  5. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  6. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
Trading Center