Using the information provided below, rank each individual according to the leve
ID: 2730255 • Letter: U
Question
Using the information provided below, rank each individual according to the level of risk each is taking in terms of investments in financial assets.
a.Scott deposits 15% of his bi-weekly paycheck into a savings account at his local bank.
b.Lora receives a $7,000 bonus from work and uses the entire amount to purchase stock shares in Spice It Up, a new company that produces chili and pepper sauces.
c.Eva is given $2,000 as a college graduation gift from her aunt and uncle. She decides to invest it into a mutual fund, since she has secured a job that will cover all of her necessary costs.
d.Loans "R" Us is a local bank that specializes in providing mortgages to families who are first-time buyers.
Most Risk to Least Risk.
Explanation / Answer
a. Scott's deposits in savings bank --- Least Risky as Savings accounts is a safe deposit.
b. Lora's investment is Spice it Up share ---Most risky as tyhe company is new without any history of financial perofrmance.
c. Eva's investment in Mutual fund--- Moderate risk as Mutual funds diversify risk but still market conditions carry some risk.
d. Mortgage loan of U's bank to first time home buyers -- slightly risky due to the lack of history of payments of new home buyers.
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