To determine the portfolios' levels of risk from highest to lowest, we need to evaluate the risk associated with each type of investment. Generally speaking, stocks in emerging companies are considered the riskiest, followed by stocks in large, old corporations. U.S. Treasury Bonds and Certificates of Deposit (CDs) are typically considered the safest investments.
### Breaking Down the Portfolios:
#### Portfolio 1:
- Stock in Large, Old Corporation: \[tex]$500
- Stock in Emerging Company: \$[/tex]5,000
- U.S. Treasury Bond: \[tex]$3,000
- Certificate of Deposit: \$[/tex]500
#### Portfolio 2:
- Stock in Large, Old Corporation: \[tex]$2,000
- Stock in Emerging Company: \$[/tex]500
- U.S. Treasury Bond: \[tex]$500
- Certificate of Deposit: \$[/tex]6,000
#### Portfolio 3:
- Stock in Large, Old Corporation: \[tex]$2,000
- Stock in Emerging Company: \$[/tex]1,000
- U.S. Treasury Bond: \[tex]$1,000
- Certificate of Deposit: \$[/tex]3,000
### Assessing Risk Levels:
- Portfolio 1: The majority (\[tex]$5,000) is invested in an emerging company, which is the riskiest type of investment in the table.
- Portfolio 2: The majority (\$[/tex]6,000) is invested in a Certificate of Deposit, which is considered a safe investment. Although it has some risk in stocks (\[tex]$2,000), only a small portion (\$[/tex]500) is in high-risk emerging companies.
- Portfolio 3: It has a balanced allocation with reasonable amounts in both safer investments (U.S. Treasury Bonds and CDs totaling \[tex]$4,000) and riskier stocks (\$[/tex]3,000), with \[tex]$2,000 in a moderately risky large corporation and \$[/tex]1,000 in an emerging company.
### Conclusion:
From highest to lowest risk:
1. Portfolio 1 (High investment in risky emerging company stocks)
2. Portfolio 3 (Balanced but still exposed to some risk with \$3,000 in stocks)
3. Portfolio 2 (Most investments in safe CD, minimal exposure to risk)
Hence, the correct answer is:
Portfolio 1, Portfolio 3, Portfolio 2.
