Martha recently won $10,000 on a scratch lottery ticket. She is 67 yea

QUESTION

Martha recently won $10,000 on a scratch lottery ticket. She is 67 years old and wants to invest her windfall but avoid any risk of losing her money. Which of the following should Martha avoid?

A) bank certificates of deposit
B) U.S. Treasury notes
C) investor-grade bonds
D) corporate secured bonds
E) speculative-grade bonds

ANSWER

Answer: E
Explanation: E) Speculative-grade bonds, or junk bonds, are considered high risk with a greater probability of default, where the issuer would be unable to meet interest payments or repayment of principal.