A 60-year old customer has a 401(k) account with your firm that has $280,000, mainly invested in growth mutual funds. The custom
er has an elderly widowed aunt who has died, and her estate attorney has contacted him, notifying him that he has been left $100,000 as an inheritance. The customer is single and has an annual income of $100,000 per year. He wants to use the inheritance to buy a retirement home, which he expects to do in 7 years. Over this investment time horizon, the general expectation is that interest rates will rise. The best recommendation to the customer is to invest the $100,000 in:
Money market instruments can be defined as a form of securities that help to provide businesses, banks as well as the government with large sum of amounts of low-cost capital for a short period of time because the financial markets tend to meet longer-term cash needs while Businesses tend to need short-term cash due to the fact that payments for goods and services sold might take months which is ‘Money Market’ are often been used to help to define a market where short-term financial assets are traded because they aim to increase the financial liquidity of a businesses company's or organization's.
The best recommendation to the customer is to invest the $100,000 in: MONEY MARKET INSTRUMENTS
