Investment VehiclesQuestion 88 of 100
Treasury securities are generally considered to have virtually no:
a.Default (credit) risk, because they are backed by the U.S. government
b.Interest-rate risk
c.Reinvestment risk
d.Inflation risk
Explanation
U.S. Treasury securities carry essentially no default risk because they are backed by the full faith and credit of the federal government. However, they remain exposed to interest-rate, reinvestment, and inflation risks. Investors accept lower yields for this credit safety.
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