Your 68 year old client wishes to make an investment, but doesn’t want any risk or have their money tied-up for too long; what investment vehicle would be best for the given situation?
Explanation
Answer: C - A 68 year old client that doesn’t’ want any risk or a long maturity investment vehicle would do best with investing in treasury bills. Treasury bills are issued by the federal government. These securities are in denomination of $1,000 to $100,000 and mature in 3 to 12 months and are sold at a discount. Interest is subject to federal income tax but exempt from state and local tax, making them the most popular marketable securities. Treasury bills are sold at weekly auctions through Federal Reserve Banks and their branches. There is a large and active market for Treasury bills, which means individuals or firms can easily dispose of them when cash is needed. The advantages of Treasury Bills include short maturities, a virtually default free status, and ready marketability. However, the fact that their yields are normally the lowest of any marketable security is a major disadvantage.
