Tax & EvaluationQuestion 109 of 110
A customer will need a down payment for a home purchase in 14 months. The appropriate primary investment objective is:
a.Preservation of capital and liquidity
b.Aggressive capital appreciation
c.Tax-advantaged long-term growth
d.Speculation using sector funds
Explanation
A known expense within roughly a year rules out volatility, because a decline just before the purchase cannot be recovered in time. Growth and speculation both accept short-term losses in exchange for long-run returns the customer will never realize. Time horizon is the controlling suitability factor here.
Practice all 110 questions free — no signup required.
Related questions on this topic
- A donor wants to make a large lump-sum contribution to a 529 plan without using lifetime gift tax exemption. Which feature helps?
- A retiree holds only long-term certificates of deposit and a money market fund. The greatest risk to this portfolio over a 25-year retirement is:
- Which type of risk cannot be reduced by holding a widely diversified equity mutual fund?
- The dominant risk in a high-yield corporate bond fund compared with a Treasury fund is:
- Interest rates rise sharply. Which fund would most likely experience the largest price decline?
- A customer in a high federal tax bracket wants current income in a taxable account and is comfortable with moderate interest rate risk. Which recommendation best fits?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Series 6 — Investment Company & Variable Contracts Rep · How we review