Which variable has the highest risk and which variable has the lowest risk?

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The volatility of any investment will usually determine the level of risk. Higher volatility means greater risk, and vice-versa. Stocks, for example, are more volatile that cash accounts or bonds and therefore have a greater risk of being ruined.

Commodities such as silver and gold are also considered more risky than stocks, since they can fluctuate significantly in a short time. Furthermore physical assets such as real estate also carry high risks due to their illiquidity – it takes considerable effort and time in order to sell them off at favorable rates.

Cash accounts, also known as savings and current, are less risky investments. They offer predictable returns over longer time periods with low price volatility. Additionally, securities issued by the government are less risky than corporate bonds due to their creditworthiness. Investors who need to protect themselves from market volatility will find them more safe.

In conclusion, variables that are more volatile or illiquid – such as stocks and physical assets – tend to carry highest level of risks whereas variables with fixed income characteristics – i-e government bonds and certain types of cash accounts – generally exhibit lowest degree of risks for potential investors.

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