Treasury bonds are

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Treasury bonds are

BlackTom AI · Accepted Answer

Examining the statement 'Treasury bonds are' requires evaluating each option against standard definitions of government securities.
Option a: 'a. short-term debt instruments issued by corporations.' This is incorrect because Treasury bonds are not issued by corporations and they are not short-term; they are government securities with long maturities, whereas corporate short-term debt would be commercial paper or similar instruments. The mismatch in issuer and maturity makes this option false.
Option b: 'b. long-term debt instruments issued by the government to finance the commonwealth budget deficit, and have higher default risk than corporate bonds.' While it correctly notes that Treasury bonds are long-term government debt, the claim that they have higher default risk than corporate bonds is inaccurate; Treasury bonds are generally viewed as having very low or risk-free default risk compared with most corporate bonds. This makes the statement misleading and incorrect.
Option c: 'c. short-term debt instruments issued by the government to inject funds into the banking system.' This option misclassifies Treasury bills as short-term government instruments intended to dabble in monetary operations, but Treasury bonds are long-term, not short-term, and their purpose is not solely to inject funds into the banking system. Therefore this option is incorrect on both maturity and purpose.
Option d: 'd. long-term debt instruments issued by the government to fund the Commonwealth budget deficit and are considered risk-free.' This aligns with standard definitions: government-issued, long-term, used to finance deficits, and generally treated as risk-free (or very near risk-free) in many countries due to sovereign backing. The phrase 'risk-free' reflects the typical creditworthiness assumption for government securities, though in practice some risk-adjusted analyses consider rare sovereign risk. Overall, this option correctly captures the conventional characterization of Treasury bonds.
In summary, options a, b, and c contain factual inaccuracies about issuer, maturity, purpose, or risk profile, while option d accurately describes Treasury bonds as long-term government debt used to finance deficits and typically regarded as risk-free. The structured distinctions highlight why the other choices do not describe Treasury bonds correctly.

MCD2170 - T1 - 2025 Pre-class Quiz Week 6

Treasury bonds are

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