Risk, TVM, and Portfolio Diversification

1.Why are investors risk-averse? How can these investors measure the level of risk in an investment and how much compensation is justified for added risk? 2.Why is the time value of money an important consideration when evaluating an investment opportunity? Explain your response and use examples. 3.What is a diversified portfolio? Why is it necessary that a portfolio be diversified? How could an investor diversify her/his portfolio?

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