Question

"A couple wants to invest for the college education of their 2 children, currently ages 1 and 3. They estimate they will need to start using the funds to pay for college in 15 years. The BEST recommendation is to invest in:"

Answer 1

Answer: b. 10 year treasury notes

Explanation:

All options listed are backed by the US Government so the couple will not have to worry about any of these options not paying them in time for their kids to go for college.

The best option would be the 10 year Treasury notes because the other options either mature way sooner than the 15 required years ( treasury bills mature in a year) or after the required 15 years ( 20 and 30 year treasury bonds).

When the 10 year note matures in 10 years, the proceeds if not enough, can be further invested in a 5 year note thereby ensuring that the payment for college will be received in 15 years.