Question

If you were investing in a bond, would you prefer to invest in a U.S. Treasury bond, an AAA rated corporate bond or a junk bond?

Answer 1

Among all, treasury bonds are the least risky and junk bonds are most risky.

A junk bond can provide a much higher return at the cost of a higher risk of default. A treasury bond is backed by government and does not have default risk.

Treasury bonds provide lowest expected return.

Hence my investment decision would be based on my risk-taking ability and expected return.

In case I don't want to take any kind of risk I would go with treasury bond.

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