Rank the Following Asset Classes in Terms of Risk, from Highest

question 37

Multiple Choice

Rank the following asset classes in terms of risk, from highest risk to lowest risk: I. Bonds
II. Individual stocks
III. 500 Index
IV. Certificates of deposit

• A)IV, II, III, I
• B)II, III, I, IV
• C)II, I, III, IV
• D)II, IV, III, I

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Definitions:

Forward Contract

A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date.

Monetary Liability

An obligation of a company or individual to pay a sum of money in the future, typically involving interest.

Hedge

A financial strategy implemented to reduce the risk of adverse price movements in an asset, typically through derivative contracts.

Premium

The amount paid for a product or service beyond its basic cost, often relating to insurance policies, bonds, or options contracts.