Which statement describes a low-risk investment?A.A stockbroker recommends his clients invest in stocks from a start-up company.B.A stockbroker recommends his clients invest in stocks from well-established companies.C.A mutual fund invests half of its assets in stocks and half in real estate.D.A mutual fund invests in government bonds.SUBMITarrow_backPREVIOUS
Question
Which statement describes a low-risk investment?A.A stockbroker recommends his clients invest in stocks from a start-up company.B.A stockbroker recommends his clients invest in stocks from well-established companies.C.A mutual fund invests half of its assets in stocks and half in real estate.D.A mutual fund invests in government bonds.SUBMITarrow_backPREVIOUS
Solution
The statement that describes a low-risk investment is: "A mutual fund invests in government bonds."
This is because government bonds are generally considered to be one of the safest investments. They are backed by the full faith and credit of the government that issues them, meaning the risk of default is extremely low.
In contrast, investing in stocks, whether from a start-up or a well-established company, carries a higher level of risk. The value of stocks can fluctuate significantly, and there is always the risk that the company could underperform or even go out of business.
Similarly, investing in real estate can also be risky, as the value of property can go up and down, and there are many factors that can affect the profitability of real estate investments.
Therefore, out of the options provided, investing in government bonds is the lowest risk.
Similar Questions
Which option is an example of a low-risk investment?A.Certificates of depositB.Mutual fundsC.Hedge fundsD.StocksSUBMITarrow_backPREVIOUS
An investor whose highest priority is avoiding risks, even if it means a low return on investment, would most likely invest in _____.A.stocksB.mutual fundsC.bondsD.hedge funds
Fill in the Blank QuestionFill in the blank question. in an investment means minimal risk of loss, while in an investment means a measure of uncertainty about an outcome.
Which statement best describes the relative risk of two types of investment?A.Certificates of deposit are riskier than hedge funds.B.Stocks are riskier than savings accounts.C.Bonds are riskier than mutual funds.D.Individual retirement accounts are riskier than stocks.
Why are stocks considered a high-risk form of investment?A.Money invested in stocks must be withdrawn quickly.B.The government can seize stocks during emergencies.C.The value of stocks can rise and fall unpredictably.D.Stocks can only be purchased using borrowed money
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.