When investing for a long horizon,investors care about the volatility of ________ returns and not the volatility of ________ returns.

Question

Quizplus · Accepted Answer

When investing for a long horizon, investors care about the cumulative returns over time, as opposed to the average returns. Volatility in the average returns does not matter as much if the cumulative returns are positive over the long term. Therefore, the best answer is B, where investors care about the volatility of cumulative returns, not the volatility of average returns.

When Investing for a Long Horizon,investors Care About the Volatility