Which one of the following lists the investments in order of least risk to most risk?

Which one of the following lists the investments in order of least risk to most risk?

• A. High-grade municipal bonds, high-grade preferred stock, limited partnerships, growth mutual funds
• B. Money market accounts, puts and calls, high-grade convertibles, future contracts
• C. Treasury securities, high-grade convertibles, REITs, collectibles
• D. Fixed income annuities, Treasury securities, high-grade convertibles, REITs

Answer: (C)

The selection of investments in choice C—Treasury securities, high-grade convertibles, REITs, and collectibles—reflects an accurate progression from least risk to most risk based on the characteristics and historical performance of these asset classes. Treasury securities, issued by the federal government, are considered one of the safest investment options available. They are backed by the government’s credit and have very low default risk. High-grade convertibles, which are a type of corporate bond that can be converted into equity, carry more risk than Treasury securities due to their exposure to the performance of the issuing company, but they still provide some level of security due to their bond characteristics. Next in the list, Real Estate Investment Trusts (REITs) allow investors to directly invest in real estate without having to buy properties. While they provide the potential for higher returns than bonds or fixed-income assets due to their equity component and exposure to real estate market fluctuations, they also come with more risk. Collectibles, like art, antiques, or rare coins, represent the highest level of risk on this list. The returns on collectibles can be highly volatile and depend heavily on market trends, subjective value assessments, and liquidity, making them less predictable as an investment compared to the

The selection of investments in choice C—Treasury securities, high-grade convertibles, REITs, and collectibles—reflects an accurate progression from least risk to most risk based on the characteristics and historical performance of these asset classes.

Treasury securities, issued by the federal government, are considered one of the safest investment options available. They are backed by the government’s credit and have very low default risk. High-grade convertibles, which are a type of corporate bond that can be converted into equity, carry more risk than Treasury securities due to their exposure to the performance of the issuing company, but they still provide some level of security due to their bond characteristics.

Next in the list, Real Estate Investment Trusts (REITs) allow investors to directly invest in real estate without having to buy properties. While they provide the potential for higher returns than bonds or fixed-income assets due to their equity component and exposure to real estate market fluctuations, they also come with more risk.

Collectibles, like art, antiques, or rare coins, represent the highest level of risk on this list. The returns on collectibles can be highly volatile and depend heavily on market trends, subjective value assessments, and liquidity, making them less predictable as an investment compared to the