Question

Which of the following correctly orders the investments from LOWER risk to HIGHER risk?

Answer 1

Treasury bond − Diversified mutual fund - Stocks.

An investment is an asset or item that is purchased with the hope that it will generate income or will appreciate in value. All investments involve some degree of risk. In finance, risk refers to the degree of uncertainty or potential financial loss that could happen in an investment decision.

In general, as investment risks rise, investors seek higher returns to compensate themselves for taking such risks. Relying on personal resources has more risk than relying on public resources of producers.

Usually, a portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds would be considered to be the highest risk portfolio.