Which of the following statements is true with regard to the risk of investments?
A) There is very little risk in an IPO since returns often exceed 20% in the first day.
B) Mutual funds containing mostly large stocks are more risky than mutual funds containing smaller stocks.
C) If you prefer less risk, purchase a bond issued by a successful and established firm.
D) There is little risk in purchasing land as an investment since the value of land always appreciates over time.

Question

Quizplus · Accepted Answer

Mutual funds containing mostly large stocks are generally considered less risky compared to those containing smaller stocks due to the stability and established nature of large companies. Bonds issued by successful and established firms are considered lower risk because such firms are more likely to meet their debt obligations. The statements about IPOs and land investments are misleading; IPOs can be very risky with no guarantee of high returns, and land values can fluctuate based on various factors, meaning they do not always appreciate over time.

Which of the Following Statements Is True with Regard to the Risk