Future Business Leaders of America (FBLA) Agribusiness Practice Test

Disable ads (and more) with a membership for a one time $4.99 payment

Enhance your FBLA Agribusiness knowledge with our comprehensive test. Dive into flashcards and multiple-choice questions, complete with hints and explanations, to ensure exam success. Prepare confidently for a bright future!

Start Multiple Choice Practice Test
Start Flash Cards

Practice this question and more.

What type of investment is a municipal bond?

  1. A short-term risky investment

  2. A long-term safe investment

  3. A high-yield stock option

  4. A speculative real estate investment

The correct answer is: A long-term safe investment

Municipal bonds are considered a long-term safe investment primarily because they are issued by local or state governments to finance public projects like schools, highways, or infrastructure. These bonds are known for their relative safety compared to other types of investments because they are backed by the government entity that issues them. Furthermore, municipal bonds often provide tax advantages, as the interest earned is frequently exempt from federal income tax and sometimes state and local taxes as well. This combination of safety stemming from government backing and potential tax benefits makes them a popular choice for conservative investors looking to preserve capital while generating predictable income over a longer investment horizon. In contrast, other investment types listed, such as short-term risky investments, high-yield stock options, or speculative real estate investments, are associated with higher levels of risk and volatility, which do not align with the characteristics of municipal bonds.

More Questions Like This