If You Have a Very Low Tolerance for Risk,which of the Following

question 10

Multiple Choice

If you have a very low tolerance for risk,which of the following bonds would you be least likely to hold in your portfolio?

• A)a U.S. Treasury bond
• B)a municipal bond
• C)a corporate bond with a rating of Aaa
• D)a corporate bond with a rating of Baa

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Definitions:

Compounded Semi-Annually

Refers to the process of applying interest to a principal sum twice a year, leading to interest being earned on previously earned interest.

Lump Sum Payment

A single payment made at a particular time, as opposed to multiple payments made over time.

Compounded Monthly

A financial term describing the process where interest earned is added to the principal each month, leading to increased interest in the next month.

Lump Sum Payment

A single payment made at a particular time, as opposed to several smaller installments.