Question

Consider the following statements:

Statement-I: If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be able to exercise their claims to receive payment.

Statement-II: The USA Government debt is not backed by any hard assets, but only by the faith of the Government.

Which one of the following is correct in respect of the above statements?

Accepted Answer

A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I

Answer

B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I

Answer

C. Statement-I is correct, but Statement-II is incorrect

Answer

D. Statement-I is incorrect, but Statement-II is correct

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