Question

List the following stocks and bonds in order from lowest default risk to highest default risk:

Answer 1

A foreign government bond is issued by a Country that needs money and borrows it from the investors, therefore, you would become a creditor of the government/Country.

Stocks represent part of the ownership of a corporation, but preferred stockholders get paid before the common stockholders, especially in case of insolvency of the corporation.

Therefore, the least risky investment is a bond of a foreign government, while the riskiest investment is a common stock.

Hence, the correct answer is B. foreign government bond, preferred stock, common stock.