Multiple Choice
One common advantage of a long-term investment is:
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7. Receivables and Investments
Introduction to Investments in Securities
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In which of the following situations would purchasing a savings bond be the best investment to earn interest?
A
When you need immediate access to your funds for daily expenses.
B
When you are seeking high short-term returns with significant risk.
C
When you want a low-risk, long-term investment with guaranteed interest.
D
When you want to invest in stocks for potential capital gains.
Verified step by step guidance1
Understand the nature of savings bonds: Savings bonds are government-issued securities that provide a low-risk investment option with guaranteed interest over a long-term period.
Evaluate the characteristics of savings bonds: They are not suitable for immediate access to funds or short-term high-risk investments, as they are designed for long-term stability and predictable returns.
Compare savings bonds to other investment options: Savings bonds are ideal for individuals seeking a secure and low-risk investment, unlike stocks, which are associated with potential capital gains but higher risk.
Identify the correct scenario for savings bonds: Savings bonds are best suited for situations where the investor desires a low-risk, long-term investment with guaranteed interest.
Conclude that purchasing a savings bond is not appropriate for daily expenses, short-term high-risk returns, or stock investments, but is ideal for long-term financial security with guaranteed interest.
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