Stocks are a risky investment. Treasury Bills are a highly liquid and risk free investment whose interest
Question:
Stocks are a risky investment. Treasury Bills are a highly liquid and risk free investment whose interest income is not subject to state income taxes. Stocks have significantly outperformed Treasury Bills over the long term. In light of these higher returns, which best explains why an individual would invest in Treasury Bills vs. stocks?
Group of answer choices
US Treasury bills are highly liquid; exempt from state & local taxes; and have lower return than stocks.
US Treasury bills are highly liquid and exempt from state taxes.
Preference for a very low risk investment would result in an individual choosing Treasury Bills over stocks despite lower expected returns
The individual may not want higher returns associated with stocks
Stocks are riskier than Treasury bills.
Essentials Of Federal Taxation 2018
ISBN: 9781260007640
9th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver