Jenna receives an investment newsletter that recommends that she invest in a stock that has doubled the return of the S&P 500 in the last two months. It also claims that this stock is a "safe bet" for the future. Which of the following statements is correct regarding this information?
A) This investment newsletter is most likely correct because they most likely have some special knowledge about the stock.
B) The investment newsletter contains contrary information since the stock must be a high risk and therefore cannot also be a "safe bet."
C) It is common for individual stocks to double the return of the S&P500 and still be a "safe bet."
D) None of these statements are correct.

Question

Quizplus · Accepted Answer

The newsletter's claim that the stock is a "safe bet" contradicts the high-risk nature implied by its recent high returns, as high returns often come with higher risk.

Jenna Receives an Investment Newsletter That Recommends That She Invest