Brenda has received a $10,000 gift from her mother and is trying to decide how to invest it.She thinks she would like to invest it in stocks because she knows that stocks have been earning about 10%rate of interest over the last several years.What aspect of investing is Brenda most concerned about?
a)risk
b)return
c)diversification
d)liquidity
IS C CORRECT ANSWER?THANK YOU:))))
Does this definition fit the question?
http://stocks.about.com/od/understandingstocks/a/0606Diversifty.htm
B - Return
No, option C (diversification) is not the correct answer. Brenda's concern is related to the potential return on investment, so the correct answer is option B (return).
Investing in stocks can indeed provide a return, but it is important to note that the historical return of 10% is not guaranteed in the future. The stock market can be volatile, and returns can vary significantly from year to year. Brenda's concern about return indicates that she wants to ensure her investment grows over time.
To further explain how to arrive at the correct answer, let's go through the options provided:
a) Risk: While risk is an essential aspect of investing, it is not specifically mentioned in the question. However, Brenda's concern about return indirectly implies that she might be aware of the risks associated with investing in stocks.
b) Return: This is the correct answer. Brenda's main concern is to make sure her investment earns a return, as she mentions that stocks have been earning around a 10% rate of interest in recent years.
c) Diversification: Although diversification is a crucial concept in investing, it is not explicitly mentioned in the question. Diversification refers to spreading investments across different asset classes, sectors, or geographic regions to reduce risk.
d) Liquidity: Liquidity refers to the ability to convert an investment into cash quickly without significantly impacting its price. While it is also an important consideration, it is not mentioned directly in the question.