contestada

Which of the following would be considered the highest risk portfolio? A portfolio made up of 20% savings accounts, 50% mutual funds, and 30% bonds. B portfolio made up of 40% mutual funds, 40% Treasury bonds, and 10% stocks. C portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds. D portfolio made up of 70% mutual funds, 10% stocks, and 20% Treasury bonds

Respuesta :

The correct answer is C.

Equity funds tend to be riskier than instruments with fixed return like savings accounts and bond. Stocks and mutual funds can be classified as equity funds while saving account and bonds have fixed return. 

The portfolio in option C has 60% stocks and 30% mutual funds ending up with 90% equity funds. The portfolio in C has the highest level of equity funds in comparison to other options, hence it has the highest risk.