Which one of the following types of investments has the highest risk and the highest potential return on your investment?
Stocks, bonds and mutual funds are the most common investment products. They all have higher risks and potentially higher returns than savings products. For many decades, the investments that ensured the highest average rate of return were inventories.
How easily an investment can be exchanged for cash is known as?
How easily an investment can be exchanged for cash is known as diversification.
How long will it take an investment to double in value using the Rule of 72 if its earn 2% 5% 10%?
How Rule 72 Works For example, Rule 72 says that investing $ 1 with an annual fixed interest rate of 10% would take 7.2 years (72/10) = 7.2 to rise to $ 2. In reality, it will take 7.3 years for the 10% investment to double (1,107.3 = 2) Rule 72 is reasonably true for low rates of return.
What is investment risk and return?
Return on investment is the profit expressed as a percentage of the initial investment. … Risk is the possibility that your investment will lose money.
Which of the following correctly orders the investments from low-risk to high risk?
The correct answer is a Equity Mutual Fund diversified with treasury bonds.
What is the typical relationship between risk and return?
In general, the higher the potential return on investment, the higher the risk. There is no guarantee that you will actually get a higher return by accepting a higher risk. Diversification allows you to reduce the risk of your portfolio without sacrificing potential returns.
Which of the following is a factor that determines how much investment risk a person can handle?
A person’s age, investment goals, income, and level of comfort influence the determination of their risk tolerance. An aggressive investor or someone with a greater tolerance for risk is willing to risk more money for the possibility of a better return than a conservative investor who has a lower tolerance.
Which investment type typically carries the least risk a?
The type of investment that usually carries the least risk is a savings account. CDs, bonds and money market accounts can be classified as the least risky types of investments. These financial instruments have minimal market exposure, which means that they are less affected by fluctuations than by shares or funds.
Is there any investment that is free of risk?
There is no such thing as a risk-free investment – all investments, including those that guarantee a return on equity, carry some kind of risk. But those willing to engage in the low- to moderate-risk investment category may find significantly better returns than those offered in the safe category.
What is not considered a high risk investment?
Of the options listed for 1, only investing in CDs is considered a high risk investment. Equity investments are left without a security guarantee, while CDs are held with banks with FDIC insurance.
What type of bond carries the most amount of risk?
Corporate Bonds: Bonds issued by for-profit companies are riskier than government bonds, but they tend to offset this additional risk by paying higher interest rates. In recent history, total corporate bonds have tended to pay around a percentage point more than treasuries of similar maturity.
Which of the following would be considered the highest risk investment?
Shares / capital investments include stocks and mutual funds. These investments are considered the most risky of the three main asset classes, but they also offer the greatest potential for high returns.
Which two factors have the greatest influence on risk for an investment?
Which two factors have the greatest impact on investment risk? Duration of investment.
What is the safest type of investment?
For example, certificates of deposit (CDs), money market accounts, municipal bonds and treasury-protected securities (TIPS) are among the safest types of investment. … Money market accounts are similar to CDs because both types of deposits are in banks, so investors are fully insured up to $ 250,000.
Where should I invest my money to get highest return?
We will now quickly grasp each of the best high-yield investment options in India 2021 one by one:
- Unified Insurance Plan (ULIP) …
- Public Insurance Fund (PPF) …
- Mutual fund. …
- Bank fixed deposits. …
- National Pension System (NPS) …
- Savings scheme for senior citizens. …
- Direct capital. …
- Investing in real estate.