What is an investment portfolio?

What is an investment portfolio?

• A. A collection of financial assets
• B. A single stock investment
• C. A savings account
• D. A type of retirement plan

Answer: (A)

An investment portfolio is accurately defined as a collection of financial assets. These assets can include stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other types of investments. The purpose of an investment portfolio is to manage and organize an individual's or institution's investments in a way that reflects their financial goals, risk tolerance, and investment strategy. By holding a diversified collection of assets, investors can spread risk and aim for a balanced return on their investments. This definition emphasizes the broad nature of an investment portfolio, distinguishing it from single investment vehicles or savings instruments. For example, a single stock investment represents only one portion of the market, lacking the diversification that an entire portfolio provides. Similarly, a savings account is typically not considered an investment portfolio as it usually offers lower returns and is not structured to include diverse financial instruments. Lastly, while retirement plans often include an investment portfolio, they specifically refer to accounts designed to provide income during retirement, which does not encapsulate the broader concept of an investment portfolio itself.

An investment portfolio is accurately defined as a collection of financial assets. These assets can include stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other types of investments. The purpose of an investment portfolio is to manage and organize an individual's or institution's investments in a way that reflects their financial goals, risk tolerance, and investment strategy. By holding a diversified collection of assets, investors can spread risk and aim for a balanced return on their investments.

This definition emphasizes the broad nature of an investment portfolio, distinguishing it from single investment vehicles or savings instruments. For example, a single stock investment represents only one portion of the market, lacking the diversification that an entire portfolio provides. Similarly, a savings account is typically not considered an investment portfolio as it usually offers lower returns and is not structured to include diverse financial instruments. Lastly, while retirement plans often include an investment portfolio, they specifically refer to accounts designed to provide income during retirement, which does not encapsulate the broader concept of an investment portfolio itself.