Reference no: EM132622470

There are various fixed income securities like, T-bills, municipal bonds and corporate bonds. T-bills are issued by federal government and are almost risk free, there is almost zero risk associated with T-bills, one of the disadvantages of T-bills is that rate of return is very low for T-bills. Municipal bonds: Municipal bonds are issued by state governments and provide tax benefits on return to investors. Disadvantage of municipal bond is that return is low on municipal bonds as well. Corporate Bonds: Bonds are issued by corporates; Corporate bonds have higher yields bur there is un systematic risk of company becoming bankrupt is associated with corporate bonds.

Question - T-Bills are low risk because the federal government can do two things corporations cannot do, what are those two things?