Which of the following assets has the highest information costs?
A)A U.S. Treasury bond
B)A bond issued by the city of Smallplace, South Dakota
C)A bond issued by General Motors
D)A share of stock issued by General Motors

Question

Quizplus · Accepted Answer

Bonds issued by smaller entities, such as cities or towns, generally have higher information costs due to a lack of public information and reporting requirements. U.S. Treasury bonds have the lowest information costs as they are backed by the full faith and credit of the U.S. government. Bonds and stocks issued by General Motors may have some information costs, but they are likely lower than those of a bond issued by a small municipality.

Which of the Following Assets Has the Highest Information Costs