Bill chose to invest in certificates of deposit instead of real estate primarily due to concerns regarding what?

Bill chose to invest in certificates of deposit instead of real estate primarily due to concerns regarding what?

• A. Risk of property devaluation
• B. Liquidity
• C. Potential tax implications
• D. Interest rates

Answer: (B)

Investing in certificates of deposit (CDs) often appeals to individuals who prioritize liquidity, which refers to how easily an asset can be converted into cash without significantly affecting its value. Real estate, on the other hand, is generally considered a relatively illiquid investment. Selling a property can take time due to various factors, including market conditions and the need for proper marketing, whereas a CD can be accessed more quickly when it matures or through specific withdrawal options. For someone like Bill, concerns about liquidity might necessitate a quicker access to funds or a more predictable and stable investment outcome, which CDs can offer compared to the often uncertain and time-consuming process of real estate transactions. This liquidity is particularly appealing for those worried about needing immediate cash for unforeseen circumstances or opportunities. In contrast, while the risk of property devaluation, potential tax implications, and interest rates are all important considerations in investment decisions, they do not directly address the need for quicker access to capital that liquidity offers.

Investing in certificates of deposit (CDs) often appeals to individuals who prioritize liquidity, which refers to how easily an asset can be converted into cash without significantly affecting its value. Real estate, on the other hand, is generally considered a relatively illiquid investment. Selling a property can take time due to various factors, including market conditions and the need for proper marketing, whereas a CD can be accessed more quickly when it matures or through specific withdrawal options.

For someone like Bill, concerns about liquidity might necessitate a quicker access to funds or a more predictable and stable investment outcome, which CDs can offer compared to the often uncertain and time-consuming process of real estate transactions. This liquidity is particularly appealing for those worried about needing immediate cash for unforeseen circumstances or opportunities.

In contrast, while the risk of property devaluation, potential tax implications, and interest rates are all important considerations in investment decisions, they do not directly address the need for quicker access to capital that liquidity offers.