Questions: Which of the following statements is true when you invest in a federally insured bank account? Even though there is federal insurance in place, you still face inflation risk. Given the federal inșurance, you are taking no risk. Although there is federal insurance, you are faced with liquidity risk. Given the federal insurance, you are taking significant business risk.

The answer is: Even though there is federal insurance in place, you still face inflation risk.

This statement is true. Federal insurance, such as that provided by the Federal Deposit Insurance Corporation (FDIC) in the United States, protects your deposits in the event of a bank failure. However, it does not protect against inflation risk, which is the risk that the purchasing power of your money will decrease over time due to rising prices.

This statement is false. While federal insurance protects against the risk of bank failure, it does not eliminate other types of risk, such as inflation risk or opportunity cost.

This statement is generally false for federally insured bank accounts. Bank accounts are typically very liquid, meaning you can access your funds easily. Liquidity risk is more associated with investments that cannot be quickly converted to cash without a loss in value.

This statement is false. Business risk refers to the risk associated with the specific operations of a company. In the context of a federally insured bank account, you are not exposed to the business risks of the bank, as your deposits are insured up to a certain limit.