Which of the Following Investment Instruments Would a Risk-Loving Individual

question 72

Multiple Choice

Which of the following investment instruments would a risk-loving individual choose?

• A) government bonds
• B) stocks from a company listed on the Dow Jones Industrial Average
• C) stock from a very new company that has high growth potential
• D) a low-risk mutual fund

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Definitions:

Compounded Monthly

A method of calculating interest where the interest is added to the principal each month, resulting in interest being calculated on a progressively larger base each period.

Equivalent Amount

An equivalent amount refers to a value that has the same worth or value as another in a different form or denomination.

Money

A medium of exchange that is widely accepted in payment for goods and services and in settlement of debts.

Annually Compounded

Refers to the process of calculating and adding interest to a principal sum once per year.