Question

Of the following saving instruments, which is/are most likely to give you the highest price for your liquidity or the highest compensation for your opportunity cost and risk?

a. Certificates of Deposit
b. Money market mutual funds
c. Time deposit
d. a and b.
e. a,b and c.

Answer 1

Certificates of deposit (CDs) and money market mutual funds are typically those that offer the highest compensation for opportunity cost and risk, with CDs providing guaranteed higher interest rates and money market funds offering competitive rates with more flexibility.

Step-by-step explanation:

Among the saving instruments mentioned - certificates of deposit (CDs), money market mutual funds, and time deposits, the ones likely to offer the highest compensation for the opportunity cost and risk are typically CDs and money market mutual funds. While CDs guarantee a higher interest rate in exchange for locking in funds for a predetermined period, money market mutual funds offer competitive rates without a fixed term, though rates can fluctuate with market conditions. Time deposits refer to CDs and potentially other fixed deposit instruments, so choosing between option d (a and b) and option e (a, b, and c) would depend on the specific characteristics and interest rates of the time deposits in question.