You have $3,000 to invest, but will need the funds in a year to make a tuition payment. You should
A) put the money in a corporate bond.
B) buy a one-year CD.
C) buy stocks of relatively stable firms that have low risk.
D) invest in a diversified stock mutual fund.

Question

Quizplus · Accepted Answer

A one-year CD (Certificate of Deposit) is the most appropriate choice for someone who needs to access their funds in a year and wants to preserve capital while earning a modest interest rate. CDs are low-risk and provide a guaranteed return, making them suitable for short-term financial goals like making a tuition payment. Corporate bonds, stocks, and diversified stock mutual funds carry higher risks and are more suitable for longer-term investments.

You Have $3,000 to Invest, but Will Need the Funds