Which of the following statements regarding the effect of investors time horizon on portfolio choice is least accurate? A) Legal and regulatory factors usually do not affect the investment policies of individual investors. B) A commercial banks required return on investment is typically a function of its cost of funds. C) Longer time horizons may indicate an investors greater ability to take risk, even if willingness is not apparent. D) Endowments and foundations typically invest with an average or below average tolerance for risk.
Tough to pick between B and D…I’ll go with B
CFA_guy_shooter Wrote: ------------------------------------------------------- > Which of the following statements regarding the > effect of investors time horizon on portfolio > choice is least accurate? > > A) Legal and regulatory factors usually do not > affect the investment policies of individual > investors. > True, applies more to pensions, foundations. > > B) A commercial banks required return on > investment is typically a function of its cost of > funds. > Pretty sure this is true. > > C) Longer time horizons may indicate an investors > greater ability to take risk, even if willingness > is not apparent. > True. > > D) Endowments and foundations typically invest > with an average or below average tolerance for > risk. Endowments and foundations in theory should go on forever. D?
yup the answer was D. I thought that the law applied to everybody, not just companies… so I picked A Thanks for the responses!
Individuals wouldn’t be regulated though so not A. As endowments have a long term horizon they can take above average risk.