Applying what you have learned about investments as introduced to you in Chapter 19, put the following investments in order from least risky to riskiest. Which of following lists begin with the least risky investment and ends with the most risky? Least risky = 1; most risky = 5.
A) 1) Bonds; 2) Mutual Funds; 3) ETFs; 4) Preferred Stock; 5) Common Stock
B) 1) Preferred Stock; 2) Common Stock; 3) Mutual Funds; 4) ETFs; 5) Bonds
C) 1) Common Stock; 2) Bonds; 3) Mutual Funds; 4) ETFs; 5) Preferred Stock
D) 1) Bonds; 2) Common Stock 3) Mutual Funds 4) ETFs 5) Preferred Stock

Question

Quizplus · Accepted Answer

Bonds are generally considered to be the least risky investment as they offer a fixed return and are backed by the issuer. Mutual funds and ETFs are typically considered to be of moderate risk, as they are diversified but can still fluctuate based on market conditions. Preferred stock is riskier than bonds as it is a type of equity investment, while common stock is the riskiest as its value can be highly volatile and is subject to market fluctuations. Therefore, the order from least risky to riskiest in Option A is correct.

Applying What You Have Learned About Investments as Introduced to You