Question

Rank in order of average rate of return (1 being the lowest)?

1) Mutual fund
2) C.D.
3) Bond

Answer 1

The average rate of return can be ranked from lowest to highest as follows: bank accounts (savings account), bonds, and stocks (mutual funds).

Step-by-step explanation:

The average rate of return can be ranked from lowest to highest as follows:

1. Bank accounts (savings account): Bank accounts have very low risk and very low returns. The value of a savings account changes very little over time.
2. Bonds: Bonds have higher risk but higher returns compared to bank accounts. The value of a bond varies less than a stock but more than a savings account because it depends largely on interest rate fluctuations.
3. Stocks (mutual funds): Stocks have the highest risk but also have the potential for higher returns compared to bank accounts and bonds. Stock values can grow or decline by a large amount over a sustained period of time.