Which type of investment is characterized as having low risk and yet offers a steady income stream?

Which type of investment is characterized as having low risk and yet offers a steady income stream?

• A. Common stocks.
• B. Corporate bonds.
• C. Treasury securities.
• D. Real estate investments.

Answer: (C)

Treasury securities are considered low-risk investments that provide a steady income stream due to their backing by the full faith and credit of the U.S. government. They include various types such as Treasury bills, notes, and bonds, which pay interest at regular intervals. The safety of Treasury securities comes from the fact that they are virtually risk-free in terms of default, making them a favored choice for conservative investors seeking reliable returns. In contrast, common stocks tend to carry higher risk because their value can fluctuate significantly due to market conditions, and they may not guarantee any income, especially if dividends are cut. Corporate bonds may offer higher yields than Treasury securities but come with added risk depending on the financial health of the issuing corporation. Real estate investments can provide steady income through rental income, yet they also involve market and management risks, as well as significant upfront costs. As such, Treasury securities stand out as the most suitable option for investors prioritizing low risk and a consistent income stream.

Treasury securities are considered low-risk investments that provide a steady income stream due to their backing by the full faith and credit of the U.S. government. They include various types such as Treasury bills, notes, and bonds, which pay interest at regular intervals. The safety of Treasury securities comes from the fact that they are virtually risk-free in terms of default, making them a favored choice for conservative investors seeking reliable returns.

In contrast, common stocks tend to carry higher risk because their value can fluctuate significantly due to market conditions, and they may not guarantee any income, especially if dividends are cut. Corporate bonds may offer higher yields than Treasury securities but come with added risk depending on the financial health of the issuing corporation. Real estate investments can provide steady income through rental income, yet they also involve market and management risks, as well as significant upfront costs. As such, Treasury securities stand out as the most suitable option for investors prioritizing low risk and a consistent income stream.