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FinanceQ&A LibraryDecide whether the following statement makes sense (or is clearly true) or does not make sense (or is clearly false). Explain your reasoning.I bought a fund advertised on the web that says it uses a secret investment strategy to get an annual return twice that of stocks, with no risk at all.Choose the correct answer below.A.The statement does make sense because this secret investing strategy must be a new financial planning strategy that does not incorporate the three traditional investment considerations: liquidity, risk, and return.B.The statement does not make sense because investing in stocks is low-risk to get high returns, thus getting higher returns than stocks with this secret strategy must mean the fund advertised on the web is low-risk, not no risk.C.The statement does make sense because the strategy indicates that the return is a predictable amount, thus the fund advertised on the web is a no-risk investment.D.The statement does not make sense because investing in stocks is high-risk to get high returns, thus getting higher returns than stocks with this secret strategy must mean the fund advertised on the web is high-risk, not no risk.Question

Asked Apr 14, 2019

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Decide whether the following statement makes sense (or is clearly true) or does not make sense (or is clearly false). Explain your reasoning.

I bought a fund advertised on the web that says it uses a secret investment strategy to get an annual return twice that of stocks, with no risk at all.

Choose the correct answer below.

A.

The statement does make sense because this secret investing strategy must be a new financial planning strategy that does not incorporate the three traditional investment considerations: liquidity, risk, and return.

B.

The statement does not make sense because investing in stocks is low-risk to get high returns, thus getting higher returns than stocks with this secret strategy must mean the fund advertised on the web is low-risk, not no risk.

C.

The statement does make sense because the strategy indicates that the return is a predictable amount, thus the fund advertised on the web is a no-risk investment.

D.

The statement does not make sense because investing in stocks is high-risk to get high returns, thus getting higher returns than stocks with this secret strategy must mean the fund advertised on the web is high-risk, not no risk.

Step 1

The correct answer is ** “Statement D”**.

Step 2

**Justification:**

Statement A: The strategy comprise of risk, liquidity and return. Hence this statement is incorrect.

Statement B: Investing in stocks is a high-risk to get high returns and not low-risk to get high-returns. Hence this statement is incorrect.

Statement C: The strategy does not involve any return. Hence this statement is incorrect.

Statemen...

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