To determine the portfolios' levels of risk from lowest to highest, we analyze the sum of investments within each portfolio. Each portfolio includes investments in stocks, bonds, and deposits, and we discount risk level based on the total value of investments.
First, we calculate the total investment in each portfolio:
Portfolio 1:
- Stock in Large, Old Corporation: [tex]$1,800
- Stock in Emerging Company: $[/tex]600
- U.S. Treasury Bond: [tex]$1,100
- Junk Bond: $[/tex]500
- Certificate of Deposit: [tex]$1,700
Total for Portfolio 1:
\[ 1800 + 600 + 1100 + 500 + 1700 = 5700 \]
Portfolio 2:
- Stock in Large, Old Corporation: $[/tex]2,200
- Stock in Emerging Company: [tex]$1,200
- U.S. Treasury Bond: $[/tex]3,500
- Junk Bond: [tex]$1,300
- Certificate of Deposit: $[/tex]4,200
Total for Portfolio 2:
[tex]\[ 2200 + 1200 + 3500 + 1300 + 4200 = 12400 \][/tex]
Portfolio 3:
- Stock in Large, Old Corporation: [tex]$400
- Stock in Emerging Company: $[/tex]5,500
- U.S. Treasury Bond: [tex]$1,200
- Junk Bond: $[/tex]3,000
- Certificate of Deposit: $600
Total for Portfolio 3:
[tex]\[ 400 + 5500 + 1200 + 3000 + 600 = 10700 \][/tex]
Next, we order the portfolios by their total investment from lowest to highest:
[tex]\[ \text{Portfolio 1: } 5700 \][/tex]
[tex]\[ \text{Portfolio 3: } 10700 \][/tex]
[tex]\[ \text{Portfolio 2: } 12400 \][/tex]
Therefore, the order of portfolios from lowest to highest risk is:
Portfolio 1, Portfolio 3, Portfolio 2
The correct option is:
Portfolio 1, portfolio 3, portfolio 2.
