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2.  (02.02 LC) Which account option offers a higher rate of return in exchange for deposits that are larger than normal? (10 points)

a) Certificate of deposit
b) Checking
c) Savings
d) Money market

1 Answer

4 votes

Final answer:

A certificate of deposit (CD) offers a higher rate of return for larger deposits kept in the bank for a set period, with penalties for early withdrawal. The correct answer is option a).

Step-by-step explanation:

The account option that offers a higher rate of return in exchange for deposits that are larger than normal is a certificate of deposit (CD). A CD is a commitment to deposit a significant amount of money, typically in the thousands, for a fixed period ranging from a few months to several years. As a reward for this commitment, banks provide a higher interest rate than what you would receive from a regular savings account. However, accessing funds before the maturity date of the CD can result in a substantial penalty for early withdrawal.

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