Which of the following financial instruments can earn a return for its owner by promising a share of a company’s profits?

1. corporate bond
2. Treasury bond
3. stock
4. certificate of deposit
5. savings account

Which of the following assets is generally considered the LEAST liquid?

1. stocks
2. savings accounts
3. mutual funds
4. real estate
5. certificates of deposit

Suppose you have $1,000 that you can invest in a certificate of deposit at a local bank. Answer the following questions based on this information.

1. If the interest rate were 3 percent, how much would your investment be worth in 10 years? Explain and show your work.
2. If the interest rate were 6 percent, how much would your investment be worth in 10 years? Explain and show your work.
3. If your goal was to double your initial investment and if the interest rate were 5 percent, approximately how many years would it take you to reach your goal? Round your answer to one decimal place.
4. Certificates of deposit are low-risk investments. Provide an example of a financial investment you could choose if you wanted to invest your money in something that was higher risk. Would that investment likely earn a higher or lower rate of return than the certificate of deposit? Explain.