Question

You are comparing savings accounts at financial institutions based on the interest you would earn and the fees they charge. which interest rates and fees would be better if you don't need to access your money for two years? financial institution 1 has a savings account with 1% interest and fees of $10 a month. financial institution 4 offers a money market account with .05% interest and no fees. financial institution 3 offers a certificate of deposit with 2% interest. financial institution 2 has a money market account with 1% interest and no fees.

Answer 1

The best option for a savings vehicle over two years is the certificate of deposit from Financial Institution 3, which offers the highest interest rate at 2% and presumably no fees, considering the time commitment involved.

Step-by-step explanation:

To determine which financial institution offers the best option for a savings vehicle over two years without needing access to the funds, we must compare the interest rates and fees associated with each option. Let's consider each offer in turn:

• Financial Institution 1: A savings account with 1% interest but with high monthly fees of $10.
• Financial Institution 2: A money market account with 1% interest and no fees.
• Financial Institution 3: A certificate of deposit (CD) with the highest interest at 2%.
• Financial Institution 4: A money market account with a lower 0.05% interest but also with no fees.

Given that the funds will not be needed for two years, Financial Institution 3 offers the best rate with a 2% interest and no mention of any fees; this is typically because CDs offer a higher interest rate as they require the depositor to lock in their funds for a certain period, rewarding them with higher returns at the cost of liquidity. Thus, without needing to access the money and looking to maximize interest earned over two years, the CD would be the superior choice.