You are a financial adviser. Your client, Mena, does not like risk and wants Federal Deposit Insurance Corporation (FDIC) insurance. Which of the following instruments should she invest in?

Question

Quizplus · Accepted Answer

A bank savings account is backed by FDIC insurance, which means the funds deposited are insured up to $250,000 per depositor, per bank, in case the bank fails. It is a low-risk option and offers the security that Mena is looking for. Treasury bills are also low-risk options, but they don't offer FDIC insurance. An index fund and bonds issued by a corporation in financial distress are riskier options and are not backed by FDIC insurance.

You Are a Financial Adviser