Multiple choice

Which of the following is the most risky?

  1. Investing in a money market mutual fund

  2. Investing in an index fund

  3. Short term investment in an equity fund

  4. Long term investment in an equity fund
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Short-term equity investing is the riskiest because equities are volatile in the short run; you have limited time to recover from downturns. Money market funds are safest, index funds are diversified (moderate risk), and long-term equity investments allow time to ride out volatility.

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