Final answer:
A savings account offers the greatest liquidity due to its ease of converting funds to cash quickly without penalty. Stocks, bonds, and real estate are less liquid and involve various degrees of risk and potential returns. Option A
Step-by-step explanation:
The investment that offers the greatest liquidity is a savings account. Liquidity refers to the ease with which an investment can be converted into cash without affecting its market price. Savings accounts are very liquid because you can withdraw funds at any time without a penalty.
In contrast, selling common stock and corporate bonds can take time and may be subject to market conditions, thus making them less liquid. Finally, real estate typically has the lowest liquidity due to the time-consuming process of selling property and potential market fluctuations impacting the price.
When considering investment options like savings accounts, bonds, stocks, and real estate, it is important to consider both the expected rate of return and the level of risk involved. While stocks tend to offer the highest average return over time compared to bonds and savings accounts, they also come with greater risk. Conversely, savings accounts offer lower returns but are very low risk and provide high liquidity.
Therefore, for individuals seeking quick access to their funds, a savings account is the most suitable option among the choices listed, though it often comes with the trade-off of lower potential returns. Option A