ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Designed intervals in which interest rates may be changed
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Interest rates may be changed based on changes in market rates
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Interest rate remains the same throughout the term of the deposit
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Interest rate fluctuates throughout the term based on the amount in the account
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Detailed explanation-1: -What Is a Fixed Interest Rate? A fixed interest rate is an unchanging rate charged on a liability, such as a loan or mortgage. It might apply during the entire term of the loan or for just part of the term, but it remains the same throughout a set period.
Detailed explanation-2: -With a fixed-rate loan, your interest rate and monthly principal and interest payment will stay the same. Your total monthly payment can still change-for example, if your property taxes, homeowner’s insurance, or mortgage insurance might go up or down.
Detailed explanation-3: -Interest rates on fixed rate loans stay the same for the loan’s entire repayment term. This means the cost of borrowing money stays constant throughout the life of the loan and won’t change with fluctuations in the market.
Detailed explanation-4: -In the fixed interest rate scenario, the interest remains constant throughout the loan period irrespective of the changes in market conditions while in the floating interest rate scenario, the interest can decrease or increase depending on market fluctuations.
Detailed explanation-5: -The duration of Fixed Deposits is flexible. It can range from 7 days to 10 years. The rate of interest for the Fixed Deposit depends on the period for which the funds are locked in. Just like a Recurring Deposit, a Fixed Deposit amount cannot be withdrawn until the maturity period.