Question

In what order should the following investment choices be placed, from least risk to highest risk? short-term bonds, savings accounts, stocks, mutual funds stocks, mutual funds, short-term bonds, savings accounts savings accounts, short-term bonds, mutual funds, stocks mutual funds, stocks, savings accounts, short-term bonds

Answer 1

The correct order of investment choices, from least risk to highest risk, is savings accounts, short-term bonds, mutual funds, and stocks.

Step-by-step explanation:

The correct order of the investment choices, from least risk to highest risk, is savings accounts, short-term bonds, mutual funds, and stocks.

Savings accounts have very low risk and low returns, as the value of a savings account changes very little over time, but they are highly liquid.

Short-term bonds have slightly higher risk than savings accounts but also slightly higher returns. The value of a bond depends largely on interest rate fluctuations but still has less risk compared to stocks.

Mutual funds involve pooling money from multiple investors to purchase a diversified portfolio of securities. They have higher risk and potential returns compared to short-term bonds.

Stocks are the riskiest investment choice but also have the potential for the highest returns. Stock values can fluctuate significantly, making them more volatile in the short run.