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In: Finance

Three different portfolios exist, each with a different asset mix. One is low risk, one is...

Three different portfolios exist, each with a different asset mix. One is low risk, one is medium risk, one is high risk. Create a lifestyle profile for an investor

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Expert Solution

Different assets are associated with different risks. It varies from investor to investor how much risk they can take in their investment. High risk involves high returns.

i. Low risk - This risk is associated with the investors who want to invest in steady and less volatile investment. They concentrate mainly on moderate returns. Bank fixed deposit is an investment that involves low risk.

ii. Medium risk - This risk is asoociated with the investors who want to invest in slightly risk and some volatile investment but not extreme. They generate better returns. Mutual funds or shares of large and stable companies are the investments that involved medium risk.

iii. High risk - This risk is associated with the investors who want to invest in greater risk and high volatile investment. They get maximum returns. Equity mutual funds or shares of new companies are the investments that involve high risk.


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