Which of the following accurately describes a government bond?

A government bond is accurately described as a bond often considered a low-risk investment because it is issued by a government entity, typically with backing from the government’s financial resources and taxing power. Governments are less likely to default on their debt compared to corporations, making these bonds appealing to investors seeking stable and secure returns.

Investors generally view government bonds as a safe place to park their money while earning interest, especially in stable economies. The interest rates on these bonds might be lower than those on corporate bonds because of the reduced risk, but they provide a reliable stream of income, which is particularly important for conservative investors.

In contrast, bonds with variable interest rates, high-risk corporate bonds, and those tied to speculative assets come with increased risk and unpredictability. These factors highlight why government bonds stand out as a secure investment compared to the others mentioned.