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Multiple Choice QuestionWhich investment option is considered to be the safest of all investments since it is issued by the federal government?Multiple choice question.Treasury billsMutual fundsCertificates of depositCommercial paper

Question

Multiple Choice QuestionWhich investment option is considered to be the safest of all investments since it is issued by the federal government?Multiple choice question.Treasury billsMutual fundsCertificates of depositCommercial paper

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Solution

The answer is "Treasury bills".

Step by step explanation:

  1. Treasury bills: These are short-term securities that are issued by the U.S. government. They are considered to be one of the safest investments because they are backed by the full faith and credit of the U.S. government.

  2. Mutual funds: These are investment vehicles that pool together money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. While they can be a safe investment, they are not guaranteed by the federal government.

  3. Certificates of deposit: These are time deposits offered by banks with a specific, fixed term and, usually, a fixed interest rate. They are insured by the Federal Deposit Insurance Corporation (FDIC) up to a certain amount but are not issued by the federal government.

  4. Commercial paper: These are short-term, unsecured promissory notes issued by corporations. They are not backed by the government and carry a higher risk compared to government-issued securities.

Therefore, among the options provided, Treasury bills are considered to be the safest investment since they are issued by the federal government.

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