Deposits in a bank may be guaranteed by the federal government, however ______________________ can pose a risk for losing value.

• A. Stocks
• B. Bonds
• C. Other types of securities
• D. All of these are correct.

Answer: (D)

The key idea is that federal guarantees protect bank deposits, not investments. Deposits held in insured banks are safeguarded up to the insured limit, so principal is protected for cash holdings. But when you consider investments, the value is not guaranteed. Stocks can fall in value due to company performance and market conditions. Bonds carry risk from changing interest rates and potential issuer default. Other securities, including various investment products, come with their own mix of market and credit risks and are not insured against loss in the same way as bank deposits. Since each of these categories can lose value and none is guaranteed by the government in the same way as deposits, all of these can pose a risk for losing value.