Answer (B) is correct . The marketable securities with the lowest default risk are those issued by the federal government because they are backed by the full faith and credit of the U.S. government and are therefore the least risky form of investment.
Answer (A) is incorrect because Securities issued by a federal agency are first backed by that agency and secondarily by the U.S. government. Agency securities are issued by agencies and corporations created by the federal government, such as the Federal Housing Administration.
Answer (C) is incorrect because Repurchase agreements could become worthless if the organization agreeing to make the repurchase goes bankrupt.
Answer (D) is incorrect because Commercial paper is unsecured.
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