Final answer:
The statement regarding demand deposits being pooled investments is false. Demand deposits are checking accounts that provide immediate access to funds and are protected by the FDIC, offering low risk and high liquidity but generally a lower rate of return.
Step-by-step explanation:
A demand deposit is a type of bank account, such as a checking account, which allows depositors to access their funds immediately on demand through a cash withdrawal or by writing a check. This differs from investment options that pool money from many investors. Therefore, the statement "A demand deposit is an investment option in which the deposits of many investors are pooled together and invested in a safe way" is false. Banks, as depository institutions, accept these demand deposits and may use them to diversify through making loans or investments with a variety of firms to reduce risk.
Moreover, one of the advantages of demand deposit accounts is their high liquidity and low risk, partly because their safety is enhanced by the FDIC, which insures deposits up to $250,000 per account holder per insured bank. However, this protection and easy access result in a lower rate of return compared to other investment options like CDs, which require locking in funds for a specific period but generally offer a higher interest rate with a penalty for early withdrawal.