The investor's objectives are his or her investment goals expressed in terms of both risk and returns. The relationship between risk and returns requires that goals not be expressed only interms of returns. Expressing goals only in terms of returns can lead to:

Question

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The relationship between risk and returns requires that goals not be expressed only in terms of returns. Expressing goals only in terms of returns can lead to churning (excessive trading) and inappropriate investment practices by the portfolio manager.

The Investor's Objectives Are His or Her Investment Goals Expressed