Investment from the general fund permits investment in certificates of deposit (CDs) for up to ______.

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Multiple Choice

Investment from the general fund permits investment in certificates of deposit (CDs) for up to ______.

The key idea is balancing safety, yield, and liquidity for operating funds. The general fund has cash needs for everyday government operations, so investments must be accessible enough to meet obligations. Certificates of deposit offer safety and a modestly higher return, but they tie up money for a fixed period. Setting a maximum CD maturity at three years keeps funds relatively liquid—long enough to earn a better rate than very short-term placements, while not locking cash away so long that unexpected expenses or opportunities can’t be met. This three-year limit is the policy choice that optimizes cash flow flexibility with prudent yield.

The key idea is balancing safety, yield, and liquidity for operating funds. The general fund has cash needs for everyday government operations, so investments must be accessible enough to meet obligations. Certificates of deposit offer safety and a modestly higher return, but they tie up money for a fixed period. Setting a maximum CD maturity at three years keeps funds relatively liquid—long enough to earn a better rate than very short-term placements, while not locking cash away so long that unexpected expenses or opportunities can’t be met. This three-year limit is the policy choice that optimizes cash flow flexibility with prudent yield.

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