ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In general, a money market account is more liquid than a CD. In fact, many CDs have early withdrawal penalties attached to them, while money markets do not. That said, a CD will often pay a higher interest rate, because of its illiquidity.

Detailed explanation-2: -Money market accounts are not like other investments because they are highly liquid assets. Except for certain limits on the availability of recently deposited funds, money market account deposits are available for immediate withdrawal. This means these accounts can be quickly converted into cash without losing value.

Detailed explanation-3: -Compared to other bank accounts, a CD is less liquid. When you sign up for a CD, you agree to leave your money with the bank for a set period of time, the CD term. Terms can range from a few days to many years. If you try to take out money before the end of the term, the lender could charge an early withdrawal penalty.

Detailed explanation-4: -A time deposit with the bank (e.g. fixed deposit), are the least liquid compared to a savings/demand deposit with banks and currency.