Question

Which of the following are advantages of purchasing securities issued by the U.S. Treasury? (μltiple Select Question.)

a) Low risk

b) High return

c) Liquidity

d) Tax-exempt interest

Answer 1

The advantages of purchasing securities issued by the U.S. Treasury include low risk, tax-exempt interest, and liquidity.

Step-by-step explanation:

The advantages of purchasing securities issued by the U.S. Treasury include:

1. Low risk: The U.S. government is considered an extremely safe borrower, so investing in Treasury securities carries a low risk of default. This makes them a reliable and secure investment option.
2. Tax-exempt interest: The interest earned on U.S. Treasury securities is generally exempt from state and local taxes, providing a potential tax advantage for investors.
3. Liquidity: U.S. Treasury securities are highly liquid, meaning they can be easily bought or sold in the financial markets. This makes it convenient for investors to access their funds when needed.