Choose the list that shows the investment with the least risk to the one with the highest risk.
A. Mutual Funds, Savings Bonds, Stock Market
B. Savings Bonds, Mutual Funds, Stock Market
C. Savings Bonds, Stock Market, Mutual Funds
D. Stock Market, Mutual Funds, Savings Bonds
The correct answer is B. Savings Bonds typically have the least risk as they are backed by the government, followed by Mutual Funds which invest in various securities, and then the Stock Market which can have higher volatility and risk.
Well, if we're talking about risk, it's important to remember that investing is like jumping into a pool. So, let's break it down using swimming pool logic!
D. Stock Market, Mutual Funds, Savings Bonds - This is like diving into the deep end of the pool. The stock market can be quite volatile and unpredictable, making it the riskiest choice.
C. Savings Bonds, Stock Market, Mutual Funds - This is like swimming in the middle of the pool. Savings bonds generally have a fixed interest rate, making them a safer bet than the stock market.
B. Savings Bonds, Mutual Funds, Stock Market - This is like sticking to the shallow end of the pool. Starting with safer savings bonds and gradually moving into mutual funds, which offer more diversification, but still keeping some distance from the wild waters of the stock market.
A. Mutual Funds, Savings Bonds, Stock Market - This is like tiptoeing into the pool from the shallow end. Starting with mutual funds, which bundle together different stocks and bonds for diversification. Then moving to safer savings bonds and finally dipping your toe into the risky stock market.
So, the correct order from least risk to highest risk is B. Savings Bonds, Mutual Funds, Stock Market. But remember, just like swimming, it's always a good idea to be aware of your own risk tolerance before taking the plunge!
The list that shows the investment with the least risk to the one with the highest risk is:
B. Savings Bonds, Mutual Funds, Stock Market.
To determine the investment with the least risk to the one with the highest risk among the options given, we need to understand the risk levels associated with each investment.
A. Mutual Funds, Savings Bonds, Stock Market
B. Savings Bonds, Mutual Funds, Stock Market
C. Savings Bonds, Stock Market, Mutual Funds
D. Stock Market, Mutual Funds, Savings Bonds
Let's break down the risk level associated with each investment:
1. Savings Bonds: Savings bonds are considered low-risk investments. They are issued by the government and have a fixed interest rate. Since savings bonds are backed by the government, the risk of default is very low.
2. Mutual Funds: Mutual funds are a combination of different types of investments, such as stocks, bonds, or a mix of both. The risk level of mutual funds can vary depending on the types of securities they invest in. Generally, mutual funds are considered to have a moderate level of risk.
3. Stock Market: Investing in the stock market involves buying shares of publicly traded companies. The stock market can be volatile, with prices of individual stocks fluctuating daily based on various factors. Investing in individual stocks can be considered high-risk due to the potential for significant price changes.
Now, let's compare the options given:
A. Mutual Funds, Savings Bonds, Stock Market: This order represents a progression from moderate risk (mutual funds) to low risk (savings bonds) to high risk (stock market).
B. Savings Bonds, Mutual Funds, Stock Market: This order represents a progression from low risk (savings bonds) to moderate risk (mutual funds) to high risk (stock market).
C. Savings Bonds, Stock Market, Mutual Funds: This order represents a progression from low risk (savings bonds) to high risk (stock market) to potentially moderate risk (mutual funds).
D. Stock Market, Mutual Funds, Savings Bonds: This order represents a progression from high risk (stock market) to potentially moderate risk (mutual funds) to low risk (savings bonds).
Based on the explanations above, the correct order, starting from the investment with the least risk to the one with the highest risk, would be:
B. Savings Bonds, Mutual Funds, Stock Market.