Question

what term describes an investment that is lower risk because it can easily be turned into spendable funds?
○ diversified
○ liquid
○ balanced
○ stable

Explanation:

To solve this, we analyze each option:

• "Diversified" refers to spreading investments to reduce risk, not about convertibility to spendable funds.
• "Liquid" in finance means an asset can be easily converted into cash (spendable funds) with little loss in value, matching the description.
• "Balanced" usually relates to a mix of investment types (e.g., stocks and bonds), not about ease of conversion to cash.
• "Stable" refers to little price fluctuation, not about convertibility.

Answer:

B. liquid