Question

peter puts the money he earned over the summer in a chequing account at a canadian bank, with plans to pay for tuition in january. he cannot touch that money until january 1. which type of deposit does peter have?

Answer 1

Peter likely has a time deposit or a certificate of deposit (CD) because he cannot access the funds until a specific date. This type of deposit typically offers a higher interest rate but includes penalties for early withdrawal, which is different from demand deposits like regular chequing accounts.

Step-by-step explanation:

Given that he cannot access this money until January 1, the type of deposit Peter has is likely a time deposit or a certificate of deposit (CD). In this scenario, Peter agrees to leave a set amount of money in the bank for a specific period. In exchange, he may receive a higher interest rate compared to a regular savings account. It should be noted that while one can withdraw money from a CD before the end of the term, there is usually a substantial penalty for doing so. This differs from a demand deposit, like a regular checking account, where one can withdraw funds or write checks at any time without such restrictions.