Which of the Following Security Portfolios Should Offer the Highest

question 20

Multiple Choice

Which of the following security portfolios should offer the highest maturity premium?

• A) Common stocks, because they never mature.
• B) Long-term Treasury bonds, because of potential fluctuations in interest rates.
• C) Treasury bills, because of fluctuations in inflation rates.
• D) The Dow, because it is the oldest and most stable index.

---

Definitions:

Insure Against Damage

The act of securing an insurance policy to protect against financial loss due to physical damage to property or goods.

Insurance

A contract by which the insurer promises to reimburse the insured or a beneficiary in the event that the insured is injured, dies, or sustains damage to property as a result of particular, stated contingencies.

Insurable Interest

A requirement in insurance policies that the policyholder must have a financial interest in the insured item or person that would cause financial loss if damaged or lost.

Appliance Corporation

A company that specializes in producing electrical or mechanical devices intended to perform certain tasks, typically domestic ones.