Question

What are some characteristics of short-term investments? Check all that apply.

They usually last for less than a year.
They are considered low risk.
They typically include both stocks and bonds.
They typically help investors save for retirement.
They can include savings accounts and CDs.

Answer 1

Selected:
- They usually last for less than a year. (Yes — short-term investments are typically cash or cash-equivalents held for under 12 months.)
- They are considered low risk. (Yes — they prioritize liquidity and capital preservation, so they’re generally lower risk than long-term investments.)
- They can include savings accounts and CDs. (Yes — these are common short-term vehicles.)

Not selected:
- They typically include both stocks and bonds. (No — stocks are not typical short-term investments; short-term may include short-term bonds or T-bills but not stocks as a category.)
- They typically help investors save for retirement. (No — retirement is a long-term goal, so retirement savings usually use long-term investments.)