An investor faces two possible investments. One option is to purchase a financial asset that typically sells within days, while the other is to deposit funds into an interest-bearing account for one month before funds can be withdrawn. If both options feature similar risk, the deposit is likely to offer(1 point)

Question

Responses

lower return than the financial asset.
lower return than the financial asset.

the same liquidity as the financial asset.
the same liquidity as the financial asset.

greater return than the financial asset.
greater return than the financial asset.

greater liquidity than the financial asset.

Answer 1

The correct response is:

lower return than the financial asset.

Since the financial asset typically sells within days, it offers more immediate opportunities for return compared to a deposit that is locked in for one month.