Question

In: Finance

indicate whether the sentence is true or false and justify clearly, two investors can invest in...

indicate whether the sentence is true or false and justify clearly,

two investors can invest in the same portfolio but each one bearing a different portfolio risk.

Solutions

Expert Solution

ANS: True : two investors can invest in the same portfolio but each one bearing a different portfolio risk.

Explanation:

Meaning of portfolio- collection of financial instrument like stock, derivative, mutual funds etc.

There are mostly different types of market risk during an investment such as:

  • Market risk. The risk of investments declining in value because of economic developments or other events that affect the entire market. ...
  • Liquidity risk.
  • Concentration risk.
  • Credit risk.
  • Reinvestment risk.
  • Inflation risk.
  • Horizon risk.
  • Longevity risk

Now when two investor have invested in same amount of portfolio i.e having same stocks with same qty each may have different commitments and the above risk will be beared by them as per their situations.

for eg 1 investor may have family issue he may need more liquidity and may sell stocks when market is low.

other investor may not take same actions:

Conclusion: Two investors can invest in the same portfolio but each one bearing a different portfolio risk.

jeff jeffy answered 2 years ago
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