If Sally wants to save her $200 cash prize for three years, what is the best option?

Opting for a certificate of deposit (CD) is ideal for Sally's plan to save her $200 cash prize for three years. This is because a CD typically offers a fixed interest rate that is generally higher than that of a regular savings account or a money market account, making it a more favorable option for medium-term savings.

With a fixed term, CDs are low-risk investments, meaning they provide a predictable return on investment. Since Sally intends to save her money without needing to access it for three years, a CD allows her to lock in a rate for that duration, ensuring that her savings will grow steadily without the temptation of withdrawal.

In contrast, a regular savings account, while easily accessible, offers lower interest rates which may not keep pace with inflation or maximize her savings potential over three years. Similarly, a money market account can provide higher interest rates than standard savings accounts, but they may not be as advantageous as a CD's fixed rate over this time frame. Lastly, stock investments carry a higher risk and uncertainty, which may not suit Sally's goal of preserving and growing her cash safely over a specific period. This focus on stability and growth makes a CD clearly the best option for her situation.