Applying What You Have Learned About Investments as Introduced to You

question 270

Multiple Choice

Applying what you have learned about investments as introduced to you in Chapter 19, put the following investments in order from least risky to riskiest. Which of following lists begin with the least risky investment and ends with the most risky? Least risky = 1; most risky = 5.

• A) 1) Bonds; 2) Mutual Funds; 3) ETFs; 4) Preferred Stock; 5) Common Stock
• B) 1) Preferred Stock; 2) Common Stock; 3) Mutual Funds; 4) ETFs; 5) Bonds
• C) 1) Common Stock; 2) Bonds; 3) Mutual Funds; 4) ETFs; 5) Preferred Stock
• D) 1) Bonds; 2) Common Stock 3) Mutual Funds 4) ETFs 5) Preferred Stock

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Definitions:

Binomial Probability

The probability of obtaining a given number of successes in a fixed number of binary trials, where each trial has two possible outcomes.

Continuity Correction

An adjustment made to a discrete distribution when approximating it by a continuous distribution, often used in binomial to normal distribution approximations.

Continuous Probability Curve

A curve that represents the distribution of a continuous random variable, indicating the probabilities of all possible values.

Continuity Correction

An adjustment made to a discrete distribution when approximating it to a continuous distribution.