Question

Janet is risk-averse, but wants to earn the best rate of return in less than two years. Which investment would MOST LIKELY meet Janet's needs?

Question 8 options:

bonds


stocks


certificates of deposit


stock-based mutual funds

Answer 1

She should do certificates of deposit, because the risk is low and she earns money.

A certificate of deposit is when you agree to not touch a certain deposited amount of money in a bank. In return, the banks pays higher interest on that money.

Answer 2

Janet’s needs would be met by bonds

Step-by-step explanation

Risk-averse is the behavior of lowering risks when faced by uncertainty when investing. A person who is risk-averse requires short-term investing solutions such as bonds. Bonds are less volatile than stocks and will give Janet a lot of options. In this case, it will be best to go for an individual bond that will give her back the initial investment back on maturity of the bond.