A 60-year old man seeks an investment that gives liquidity and income. The best recommendation would be: Short-term Treasury Note
- This customer is looking for both liquidity and income. The customer can easily cash out the investment if it is liquid. We can rule out a zero-coupon bond because it pays no interest. A bank CD provides income but is not liquid, as it cannot be sold in the market. Of course, it can be redeemed with the bank that issued it, but there is usually an interest penalty for doing so.
- A blue chip stock is liquid, but its dividend income is less than that of a fixed income security. A Treasury note provides a fixed rate of return and is highly liquid. It is the best option (though a bank CD is also a viable option!).
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