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Multiple Choice
Which of the following is an example of a short-term investment?
A
Bonds
B
Retirement funds
C
Houses
D
Savings accounts
Verified step by step guidance
1
Understand the concept of short-term investments: These are assets that are expected to be converted into cash or used up within one year. They are typically low-risk and highly liquid.
Analyze the options provided: Bonds, retirement funds, houses, and savings accounts.
Evaluate bonds: Bonds can be either short-term or long-term depending on their maturity date. However, they are not inherently short-term unless specified.
Evaluate retirement funds and houses: Retirement funds are long-term investments meant for future use, and houses are illiquid assets, making them unsuitable as short-term investments.
Evaluate savings accounts: Savings accounts are highly liquid and can be accessed at any time, making them a clear example of a short-term investment.