Which of the following assets is considered to be default-risk free? Select one: a one-year municipal...

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.

Solutions

Expert Solution

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

Rahul Sunny answered 1 year ago

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