ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Certificate of deposit
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checking account
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Money market deposit account
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Any of the above savings tools would help Hannah
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Detailed explanation-1: -Hannah needs a savings tool to help her manage her everyday purchases. The savings tool needs to be very liquid and accessible. Which savings tool should Hannah choose? An individual should set aside a predetermined amount of money for saving before using any of that money for spending.
Detailed explanation-2: -Accessibility: A checking account is the most liquid of all the savings tools because the money is considered cash. The funds are easily accessed through a check, an automated teller machine (ATM), a debit card, the telephone, or Internet. Checking accounts are available at depository institutions.
Detailed explanation-3: -Which of the following statements correctly describes the security level of savings tools? Savings tools are secure because they are protected by the U.S. government against loss.
Detailed explanation-4: -Investments are less liquid than savings tools. That is, investments may not be easily converted to cash or you may have to pay a penalty to access the money.
Detailed explanation-5: -A question associated with the saving component of financial planning is: Do you have an adequate emergency fund? If you desire your money to double in 6 years, what rate of return would you need to earn?