17
RCMultiple Choice

Making Spending Decisions — Cumulative exam

Question 17 • ***CPS Online Personal Finance fall – 3-2027

How easily an investment can be exchanged for cash is known as

Answer
d
diversification.
r
risk.
l
liquidity.
r
return.

Explanation

Liquidity describes how easily an investment can be converted into cash. For example, an investment that can be sold quickly with little loss of value has high liquidity. The correct choice is liquidity; diversification means spreading investments, risk is the possibility of loss, and return is the gain or income from an investment.

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