An investor with a long time horizon should generally:

A Only hold cash

B Tolerate higher risk for potentially higher returns

C Avoid all equities

D Only invest in bonds

✓ Correct Answer: Option B

Longer horizons allow recovery from short-term volatility, supporting a higher risk allocation.

💡 Why is B) the correct answer?

The correct answer to the question "An investor with a long time horizon should generally:" is Option B: Tolerate higher risk for potentially higher returns.

The other options — A) Only hold cash, C) Avoid all equities, D) Only invest in bonds — are incorrect for this CFA Exam Prep question. As explained above: Longer horizons allow recovery from short-term volatility, supporting a higher risk allocation.

📚 About This CFA Exam Prep Practice Question

This 1-level CFA Exam Prep question from the Portfolio Management topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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An investor with a long time horizon should generally:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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