Ch.12 · Model Portfolios and Asset Allocation · medium
An investor says: 'I want high returns but I cannot sleep at night when my portfolio falls even 5%.' What does this indicate?
0% of students got this wrong
EXPLANATION
This is a classic case of high return aspiration conflicting with low risk tolerance. The investor wants equity-level returns but cannot handle equity volatility. The distributor's role is to educate the investor on the risk-return trade-off and recommend a product that matches their actual (not aspirational) risk profile.
Practising Chapter 12 one question at a time?
Try the full chapter — 50 questions, tracked score, weak area breakdown.