Prudent Person Rule
Categories: Financial Theory, Managed Funds, Ethics/Morals, Trusts and Estates
Years ago, this term was used after some courts decided that fiduciaries had to act in a reasonable way when deciding what to invest in. The courts eventually decided that prudent men invest in bonds and only bonds, so anyone investing in stocks was not prudent.
Since then, states have become a little more relaxed and use the prudent investor rule, which allows for different types of investments.