Question

Which of the following would be considered the highest risk portfolio? AA portfolio made up of 20% savings accounts, 50% mutual funds, and 30% bonds. BA portfolio made up of 40% mutual funds, 40% Treasury bonds, and 10% stocks. CA portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds. DA portfolio made up of 70% mutual funds, 10% stocks, and 20% Treasury bonds.

Answer 1

The correct answer is letter "C": A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds.

Step-by-step explanation:

Stocks are assets that can provide good returns if applied a strategy. However, this is one of the most volatile assets there are compared to others such as mutual funds or treasury bonds since the value of a stock is affected by the daily activity of the company.

In that sense, if a portfolio is based 60% only in stocks it will be a very risky one because in a matter of days that 60% can be completely lost.

Answer 2

C. A portfolio made up of 60% stocks, 30% mutual funds and 10% Treasury bonds.

Explanation

In this option, the investment is more than 50% for the money placed in stocks and the prices for stock keep on fluctuating on daily basis. This is a highly risky investment though investments in stock can give a good return. To safeguard the amounts that were saved, a person has to avoid putting more investments on stock.