How do short-term investments like T-bills typically function for investors?

Short-term investments, such as Treasury bills (T-bills), primarily function to provide investors with liquidity and safety. These securities are issued by the government and are considered one of the safest investment options due to the backing of the full faith and credit of the U.S. government.

Investors generally choose T-bills for their low risk and predictable nature, as they have a short maturity period—ranging from a few days to one year—making them highly liquid. This liquidity means that investors can quickly convert their investment into cash when needed, which is a key feature for those looking to preserve capital while still earning some return.

Additionally, the safety aspect of T-bills comes from the very low likelihood of default, making them a preferred choice for risk-averse investors or those looking to park their funds temporarily. These characteristics make T-bills an attractive option for individuals and institutions alike who prioritize preserving their capital over seeking high returns.

The other options are not aligned with the primary function of T-bills. High-risk investment opportunities do not apply in this context, as T-bills are known for their stability. The intention to secure long-term capital growth contrasts with the short-term nature of these instruments. Finally, evading taxes is