If you have $5,000 to invest but will need to use the funds in three years to buy a home, you should
A) invest in a diversified stock mutual fund.
B) buy stocks of relatively stable firms that have low risk.
C) buy a three-year CD.
D) put the money in a money market savings account.

Question

Quizplus · Accepted Answer

Buying a three-year Certificate of Deposit (CD) is the most suitable option for someone who has a specific timeframe (3 years in this case) and wants to ensure the safety of their principal while earning a fixed interest rate. CDs are low-risk investments compared to stocks or mutual funds, making them a better choice for short-term, conservative investment goals like saving for a down payment on a house.

If You Have $5,000 to Invest but Will Need to Use