Which of the following statements about investing in securities is true?

• A. Investing in securities always guarantees a positive return.
• B. Securities are only issued by government entities.
• C. Only corporations are allowed to invest in securities.
• D. All investments in securities carry some level of risk.

Answer: (D)

Verified step by step guidance

1. Understand the concept of investing in securities: Securities are financial instruments, such as stocks, bonds, or mutual funds, that represent ownership (equity) or a creditor relationship (debt) with an entity. They are used by individuals, corporations, and governments to raise capital or invest funds.
2. Clarify the first statement: 'Investing in securities always guarantees a positive return.' This is incorrect because all investments carry some level of risk, including the possibility of losing the principal amount invested.
3. Clarify the second statement: 'Securities are only issued by government entities.' This is incorrect because securities can be issued by corporations, governments, and other entities to raise funds.
4. Clarify the third statement: 'Only corporations are allowed to invest in securities.' This is incorrect because individuals, governments, and other entities can also invest in securities.
5. Identify the correct statement: 'All investments in securities carry some level of risk.' This is true because the value of securities can fluctuate due to market conditions, economic factors, and other risks, making it impossible to guarantee a positive return.