1. What does finance primarily study?
2. Why is uncertainty considered harmful to investors?
3. An investor wants to reduce dependence on one company’s performance by spreading funds across several investments; which principle is being applied?
What does finance study regarding monetary resources?
How individuals, businesses, and organizations raise, allocate, and use scarce monetary resources over time.
Why is uncertainty considered the enemy of investors?
Because uncertain future outcomes make expected earnings and investment values difficult to assess.
How does investment analysis handle uncertainty?
Through expected-return estimation, investment valuation, and asset allocation.
What is the first golden rule of diversification in investing?
Never put all your eggs in one basket.
How does diversification reduce investment risk?
By reducing reliance on a single investment.
Why are risk and opportunity linked?
Because accepting risk can provide access to uncertain gains.
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