Which of the following is an example of a high-risk investment?

• A. Certificate of deposit (CD)
• B. Savings account
• C. Common stock in a start-up technology company
• D. U.S. Treasury bonds

Answer: (C)

Verified step by step guidance

1. Understand the concept of investment risk: High-risk investments are those with a greater chance of losing value but also potentially higher returns. Low-risk investments are more stable and predictable.
2. Analyze each option: Certificate of deposit (CD) and savings accounts are considered low-risk because they are insured and offer fixed returns. U.S. Treasury bonds are also low-risk as they are backed by the government.
3. Evaluate the characteristics of common stock in a start-up technology company: Start-ups are inherently risky due to their unproven business models and uncertain future performance. Investing in their stock carries a high risk of loss but also the potential for significant returns if the company succeeds.
4. Compare the risk levels: Among the options provided, common stock in a start-up technology company is the highest-risk investment due to its volatility and uncertainty.
5. Conclude that the correct answer is common stock in a start-up technology company, as it aligns with the definition of a high-risk investment.