Question

Government bonds offer relatively low interest rates. What advantages do they provide for investors?

a) Higher returns
b) Tax benefits
c) Stability and safety
d) Variable interest rates

Answer 1

Government bonds offer stability, safety, and potential tax benefits for investors, making them attractive despite their low interest rates.

Step-by-step explanation:

Government bonds offer several advantages for investors:

1. Stability and safety: Government bonds are considered low-risk investments because the government is virtually certain to pay off the bond. This provides investors with stability and safety for their investment.
2. Tax benefits: Government bonds may offer tax advantages, such as tax-exempt interest income or tax-deferred returns. These tax benefits can help investors maximize their overall returns.

While government bonds may offer relatively low interest rates, the advantages of stability, safety, and potential tax benefits make them attractive investment options for certain investors.