In: Economics
Which of the following assets is considered to be default-risk free?
Select one:
a one-year municipal bond.
a share of stock issued by Tesla.
a two-year Treasury note.
a ten-year bond issued by Walmart.
It shall be noted that buying municipal bonds is low-risk, but not risk-free, as the issuer could fail to make agreed-upon interest payments or be unable to repay the principal upon maturity.
Stocks and bonds issued by the corporates are high-risk, as the issuer could fail to make agreed-upon interest payments or be unable to repay the principal upon maturity.
Hence, the correct answer is - a two-year Treasury note