Question 21

Investing in the stock of a technology company carries the greatest risk.

Investing in the stock of a technology company is considered the most high-risk personal investment compared to the other options listed, as technology stocks are subject to significant market fluctuations and uncertainties.

A) Buying a government bond

Buying a government bond is generally regarded as a low-risk investment. Government bonds are backed by the full faith and credit of the government, making them a stable choice for conservative investors seeking security and predictable returns.

B) Investing in a certificate of deposit

Investing in a certificate of deposit (CD) is also a low-risk option. CDs typically offer a fixed interest rate over a specified term and are insured by the FDIC up to certain limits, providing a safe place to grow savings without exposure to market volatility.

C) Opening a savings account at a commercial bank

Opening a savings account at a commercial bank is another low-risk investment choice. Savings accounts provide liquidity and are insured by the FDIC, ensuring that deposits are protected up to a certain amount, thus carrying minimal risk to the principal.

D) Investing in the stock of a technology company

Investing in the stock of a technology company carries the greatest risk among the options provided. The technology sector is known for its rapid changes and volatility, which can lead to significant variations in stock prices based on market trends, company performance, and investor sentiment.

Conclusion

In summary, investing in the stock of a technology company is the most high-risk option due to the inherent volatility associated with stock markets, especially in the tech industry. In contrast, government bonds, certificates of deposit, and savings accounts are all considered safer investments, providing more stability and lower risk to the investor's capital. Thus, option D stands out as the correct answer for its higher potential for loss.