Briefly discuss, if all government securities with like maturities have the same risk/reward characteristics, WHY an investor might be selective in the type of security he purchases?

DISCUSSION:

1. Describe why a risk adverse investor would be inclined to favor a direct issue of Treasury Department over a corporate issue of similar length to maturity. (pp. 13-14)
2. Discuss the tax ramifications of purchasing a T-bill on the open market prior to its maturity. (pp. 14-15)

3. Briefly discuss, if all government securities with like maturities have the same risk/reward characteristics, WHY an investor might be selective in the type of security he purchases? (p. 16)