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.
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