Question

How does the time horizon affect investment decisions?

a.

A shorter time horizon encourages long-term investments.

b.

A longer time horizon reduces concerns about short-term liabilities and may lead to investments in less liquid, higher-return assets.

c.

The time horizon has no impact on investment choices.

d.

A longer time horizon typically involves higher liquidity investments.

Answer: (b).A longer time horizon reduces concerns about short-term liabilities and may lead to investments in less liquid, higher-return assets. Explanation:A longer time horizon in investment planning reduces concerns about short-term liabilities and may lead to investments in less liquid, higher-return assets, as there is more time to ride out market fluctuations.

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