SIE Exam Question 488: Answer and Explanation

Question: 488

An investor is looking for a risk-free investment. An agent should recommend which of the following to this investor?

• A. Bankers' acceptances.
• B. Preferred stock.
• C. Convertible preferred stock.
• D. 90-day T-bill.

Correct Answer: D

Explanation:

D: Bankers' acceptances are money market instruments and are short term; series HH government bonds can only be exchanged for mature series EE; and convertible preferred stock is a security with risk. A 90-day T-bill is considered a risk-free investment.