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Question 8 of 10
Which statement best describes the relative risk of two types of investment?
A. Bonds are riskier than mutual funds.
B. Certificates of deposit are riskier than stocks.
C. Savings accounts are riskier than hedge funds.
D. Hedge funds are riskier than bonds.
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Sagot :

Lanuel

The statement which best describes the relative risk of two (2) types of investment is that: D. hedge funds are riskier than bonds.

What are hedge funds?

Hedge funds can be defined as a private investment partnership between institutional investors or high net-worth individuals who pool money together, so as to trade in relatively liquid assets while using techniques that involve a lot of risk.

What is a bond?

A bond refers to a fixed investment security, in which a bond issuer (creditor or investor) loans an amount of money to the bondholder (government or corporations) for a specific period of time.

Comparatively, hedge funds are considered to be generally riskier than bonds because they require the use of complex trading and portfolio construction such as:

  • Speculative trading
  • Leverage
  • Derivatives

Read more on hedge funds here: https://brainly.com/question/13846551

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