You Have a Choice Between Investing $10,000 in a CD

question 90

Multiple Choice

You have a choice between investing $10,000 in a CD that in six months will pay you $10,190 or investing $9,800 in a T-bill that in 182 days will return $10,000. Ignoring any opportunity cost between the two investments, which will give you the higher annualized return and what will the annualized return be?

• A) T-bill; 2.2%
• B) T-bill; 4.09%
• C) CD; 3.8%
• D) CD; 1.9%

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Definitions:

Need Allocation

The process of determining and distributing resources or responsibilities among parties based on their needs or requirements.

Magnitude

The size, extent, or importance of something, often used in scientific contexts to measure quantities or effects.

Contribution

The act of giving or adding to something with the purpose of improvement or making a difference.

Commitment

A pledge or binding agreement to do something or remain loyal to a cause, person, or institution.