Which investment strategy can be described as considering both financial return and social good?

Prepare for the Principles of Investment Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

The investment strategy that considers both financial return and social good is socially responsible investing (SRI). This approach combines the pursuit of profits with the intention of generating positive social or environmental impact. Investors who engage in SRI actively seek to align their portfolios with their values, often avoiding investments in companies that do not meet certain ethical, environmental, or social standards.

By emphasizing social good, SRI includes criteria such as corporate governance, environmental sustainability, and social justice, in addition to traditional financial metrics. This strategy allows investors to support causes they believe in while still aiming to achieve competitive financial returns, thus integrating ethical considerations directly into the investment decision-making process.

Other strategies, such as value investing, growth investing, and speculative investing, primarily focus on financial metrics and market trends without necessarily considering the broader impact on society or the environment. Value investing looks for undervalued stocks, growth investing targets companies with high potential for earnings expansion, and speculative investing involves taking high risks for potentially high returns, often disregarding ethical implications. In contrast, socially responsible investing prioritizes both the ethical dimensions of investments and the financial benefits, making it the correct choice for this question.

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