SIE practice questionmediumPolitical/legislative risk
Which investor faces the highest political/legislative risk?
- AAn investor in a stable domestic utility company
- BAn investor in emerging market government bonds✓ Correct answer
- CAn investor in U.S. Treasury securities
- DAn investor in a diversified index fund
Explanation
Why B — An investor in emerging market government bonds
Emerging markets often have unstable governments and changing regulations, increasing political risk. Domestic utilities, Treasuries, and index funds face much lower legislative risk.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Investment Companies & Packaged Products questions
- Systematic risk is also referred to as:
- Which risk cannot be eliminated through diversification?
- A new tax law significantly increases the tax rate on capital gains. Which risk does this illustrate?
- Diversification is most effective at reducing which type of risk?
- Which of the following is an example of unsystematic risk?
- A change in government policy results in new regulations that negatively impact a company’s industry. This is an…
- A foreign government unexpectedly nationalizes its banks, causing local bond prices to fall. U.S. investors in those…
- An investor is considering purchasing $100,000 of a Class A mutual fund that charges a front-end sales load, provides…