Risk Return Ratio The risk return ratio applies to any type of investment. Any time you invest money into something there is a risk, whether large or…
Risk Return Ratio
The risk return ratio applies to any type of investment. Any time you invest money into something there is a risk, whether large or small, you might not get your money back. In turn, you expect a return, which compensates you for bearing this risk. In theory, the higher the risk, the more you should receive for holding the investment, and the lower the risk, the less you should receive.
Consider the following investment types, their level of risk, and their potential level of return. Review the videos from this lesson if you need to refresh your memory.
- Money market accounts
- Single stocks
- Bonds
- Mutual funds
- Fixed annuities
- Real estate
For this assignment:
- Put the investments in order by least risk to greatest risk. You can list by letter only (for example: a, b, c, d, e, f).
- On a second line, order the investments by least return to greatest return. Again, you can list by letter only.
- Review the sorted lists, and determine the one investment type you would select to start your investment portfolio. Provide a one-paragraph explanation of why you selected the investment along with your expected
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