Which of the following choices is in the correct order from less risk to more risk?
A) corporate bonds, certificates of deposit, mutual funds that invest in stock, common stock
B) certificates of deposit, corporate bonds, common stock, mutual funds that invest in stock
C) certificates of deposit, mutual funds that invest in stock, common stock, corporate bonds
D) certificates of deposit, corporate bonds, mutual funds that invest in stock, common stock

Question

Quizplus · Accepted Answer

Certificates of deposit (CDs) are considered low-risk because they are FDIC insured up to certain limits, making them one of the safest investments. Corporate bonds carry more risk than CDs because they are subject to default risk, though they are generally safer than stocks. Mutual funds that invest in stocks offer diversification, which can mitigate some risk, but they are still subject to market volatility. Common stock carries the highest risk because it is directly impacted by market fluctuations and the performance of the issuing company.

Which of the Following Choices Is in the Correct Order