what is the relationship between risk * 1 point and potential reward in investments? high risk high…

what is the relationship between risk * 1 point and potential reward in investments? high risk high potential return high risk low potential return low risk high potential return a negative relationship rank in order of highest risk to lowest * 1 point risk stock, mutual fund, bonds, cds and savings accounts savings accounts, cds, bonds, stocks, mutual funds mutual funds, stocks, cds, savings accounts 401k, stocks, mutual funds, checking account, savings account

what is the relationship between risk * 1 point and potential reward in investments? high risk high potential return high risk low potential return low risk high potential return a negative relationship rank in order of highest risk to lowest * 1 point risk stock, mutual fund, bonds, cds and savings accounts savings accounts, cds, bonds, stocks, mutual funds mutual funds, stocks, cds, savings accounts 401k, stocks, mutual funds, checking account, savings account

Answer

Brief Explanations:

  1. In investments, there is a general principle that higher - risk investments have the potential for higher returns. This is because investors require compensation for taking on more risk. For example, stocks are more volatile (higher risk) than bonds, but historically, they have the potential for higher long - term returns.
  2. Regarding the ranking of risks:
    • Stocks are equity investments where the value can fluctuate widely, so they are high - risk.
    • Mutual funds, which can hold a variety of assets (including stocks), are generally less risky than individual stocks but more risky than bonds.
    • Bonds are debt instruments. While they have some risk (e.g., default risk), they are generally more stable than stocks and mutual funds.
    • CDs (Certificates of Deposit) and savings accounts are relatively low - risk as they are often insured (up to a certain amount) and have more stable values.

Answer:

  1. high risk high potential return
  2. stock, mutual fund, bonds, CDs and savings accounts