Question

quiz
question 6 of 6
parker is 21 years old, has weak financial stability, a long - time horizon, and a high risk tolerance. how should parker invest?
select a response.
more stocks than bonds and cash equivalents
more cash equivalents than bonds and stocks.
more bonds than stocks and cash equivalents.

Explanation:

Parker is young (21), has a long - time horizon and high risk tolerance. Stocks are more volatile but have higher growth potential over long periods. Bonds and cash equivalents are more stable but have lower growth. Given high risk tolerance and long time horizon, investing more in stocks (which have higher growth potential but more risk) than bonds and cash equivalents is appropriate. Cash equivalents are very low - risk/low - return, so “more cash equivalents” is wrong. Bonds are less risky than stocks but also have lower growth potential, so “more bonds” is wrong.

Answer:

A. More stocks than bonds and cash equivalents