Lucky Louie Has $10,000 That He Wants to Invest for 3

question 103

Multiple Choice

Lucky Louie has $10,000 that he wants to invest for 3 years but wants to take no risk on the investment. His best course of action would be to

• A) invest in a 3-year Treasury note.
• B) invest in a blue-chip stock portfolio.
• C) put his money in a 3-year CD at his bank.
• D) Both A and C are correct.

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Definitions:

Arbitrage Profits

Profits earned with no risk by simultaneously buying and selling the same asset in different markets to exploit price discrepancies.

Spot Gold

The current market price at which gold can be bought or sold for immediate delivery.

Risk-free Rate

The hypothetical yield of a risk-free investment, commonly signified by the interest rate on government bonds.

Cumulative Return

Cumulative return is the aggregate amount of money gained or lost by an investment over a set period, typically expressed as a percentage.