Prudent-man rule

Definition:

A rule set forth in the Uniform Prudent Investor Act that states that a fiduciary trustee has the legal obligation to invest and manage trust assets as a prudent person would, taking into account, among other factors, general economic conditions, risk, and liquidity requirements in an attempt to create a portfolio or investment strategy with objectives suited to the trust.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

First preferred stock

A type of preferred stock that has priority over other preferred issues and common stock when claiming dividends and assets.

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