Question

Sun 11:59 PM 39% tt) Do No Harm:/5 АЗ 5. Risk and return on their average expected Suppose returns but not their risk levels. an Investor is considering the assets in the following table. She has information ranking the Assist her by ranking the assets' risk levels from 1 to 4, where 1 denotes the least the most risky asset. Enter these ranks in the Risk Level column of the table. Risk Level Average Expected Return Asset 21% 12% The tollowing assets best reflects the compensation for time average expected rate of return on which of the O State and local government bonds O Shares of a broad market index fund O Short-term U.S. government bonds O Mortgage-backed securities 28 MacBook Air

Answer 1

The highest risk will have highest returns and hence we arrange table from least risk to highest risk order:

1. B
2. A
3. D
4. C

Short term US Government bonds offer best ratio as this instrument has least risk and moderate returns and investors can liquidate easily in shorter frame making it look lucrative investment.