Final answer:
Stocks typically increase risk due to high volatility, while bonds decrease risk and offer more stable returns, thereby providing a balanced risk profile for an investment portfolio.
Step-by-step explanation:
The question is asking which types of investments typically increase risk and which ones decrease risk in a portfolio. The correct answer is A) Stocks; bonds. Stocks are known for their potential to offer high returns, but they come with a high risk, especially in the short-term, due to market volatilities. On the other hand, bonds generally provide more stable, but lower returns and are considered less risky compared to stocks. Investing in mutual funds can help diversify a portfolio and reduce risk because mutual funds typically invest in a variety of stocks and bonds, spreading out the potential risk of loss.