Which is generally considered a low-risk investment?

Which is generally considered a low-risk investment?

• A. Corporate stocks
• B. U.S. Treasury bonds
• C. High-yield bonds
• D. Emerging market mutual funds

Answer: (B)

U.S. Treasury bonds are considered a low-risk investment primarily due to the backing of the federal government. They are seen as one of the safest forms of investment because the government has a very low risk of defaulting on its debt obligations. Investors view Treasury bonds as secure, and they often use them to preserve capital, especially during times of economic uncertainty. In addition to their government backing, Treasury bonds typically provide a fixed interest payment over their lifespan, which adds to their stability and predictability. This distinguishes them from other types of investments that may carry higher levels of volatility and risk, such as corporate stocks, high-yield bonds, or emerging market mutual funds, which are subject to market fluctuations and economic downturns.

U.S. Treasury bonds are considered a low-risk investment primarily due to the backing of the federal government. They are seen as one of the safest forms of investment because the government has a very low risk of defaulting on its debt obligations. Investors view Treasury bonds as secure, and they often use them to preserve capital, especially during times of economic uncertainty.

In addition to their government backing, Treasury bonds typically provide a fixed interest payment over their lifespan, which adds to their stability and predictability. This distinguishes them from other types of investments that may carry higher levels of volatility and risk, such as corporate stocks, high-yield bonds, or emerging market mutual funds, which are subject to market fluctuations and economic downturns.