Which is riskier, an investment fund or a savings account? Explain why.(1 point)

Question

Responses

Investment funds and savings accounts can both assume many different levels of risk. Since they are both overseen by a manager that could pick assets that decrease in value, neither type of investment is any riskier than the other.
Investment funds and savings accounts can both assume many different levels of risk. Since they are both overseen by a manager that could pick assets that decrease in value, neither type of investment is any riskier than the other.

Neither type of investment assumes any risk because they are both insured by the federal government against loss. This means that neither type of investment is any riskier than the other.
Neither type of investment assumes any risk because they are both insured by the federal government against loss. This means that neither type of investment is any riskier than the other.

An investment fund is riskier because the fund is overseen by a fund manager who decides which financial assets the fund is invested in. The fund manager could pick assets that decrease in value.
An investment fund is riskier because the fund is overseen by a fund manager who decides which financial assets the fund is invested in. The fund manager could pick assets that decrease in value.

A savings account is riskier because the account is overseen by an account manager who decides which financial assets the account is invested in. The account manager could pick assets that decrease in value.

Answer 1

The correct response is:

An investment fund is riskier because the fund is overseen by a fund manager who decides which financial assets the fund is invested in. The fund manager could pick assets that decrease in value.

Explanation: Investment funds typically involve a higher degree of risk compared to savings accounts due to their exposure to market fluctuations and the potential for loss in value. While savings accounts generally offer a fixed interest rate and are insured by the federal government (like FDIC insurance in the U.S.), reducing the risk of loss, investment funds are not insured and their value can vary based on the performance of the assets in which they are invested. Therefore, investing in an investment fund can lead to higher returns, but also carries a greater risk, unlike the more stable and secure nature of a savings account.