1. A local investment company is offering an investment that is supposed to earn an annual return of 20%. They claim there is a "significant possibility" of losing your money with this investment. This is an example of which Key Financial? Principle?

A. Time Value of Money

B. Diversification Reduces Risk

C. Risk-Return Tradeoff

D. Pay Yourself First

2. When choosing a particular investment (stock, bond, mutual fund) for your retirement plan:

A. you should choose a balanced mutual fund that has an expense ratio greater than 1.25%

B. you should rely on the Human Relations? officer's advice on which investment is best for you.

C. you should ask the person standing in line behind you at the Human Relations office.

D. you should always choose the investment that will match your investment goal.