Comparing CD, Savings, and Money Market Accounts

What is the primary reason for setting aside cash in a stable form?

• To avoid the volatility of various investments

• To prepare for immediate expenses

• To cover daily living costs

• To invest in long-term assets

What does FDIC insurance cover in a bank savings account?

• Personal information security

• All types of bank transactions

• Investment losses

• Up to $250,000 per depositor per bank in case of bank failure

What happens if a bank with your savings account goes under?

• You lose all your deposited money

• You can transfer the account to another bank without losses

• The government may reimburse up to a certain amount

• The bank's insurance pays out an unlimited amount

What is a key difference between a CD and a regular savings account?

• CDs have variable interest rates

• CDs require a minimum deposit amount

• CDs offer higher liquidity

• CDs have a fixed term length

What is a potential downside of locking in a CD when interest rates rise?

• There are no downsides as CDs are fully flexible

• You may miss out on higher returns

• You can withdraw anytime without penalties

• Your CD will automatically adjust to higher rates

What type of insurance protects investors in money market mutual funds?

• FDIC insurance

• SIPC insurance

• Personal asset insurance

• Market loss insurance

What does SIPC insurance not protect against?

• Operational risks of the investment firm

• Bankruptcy of the investment firm

• Losses due to market fluctuations

• Theft or fraud

What is a unique feature of money market mutual funds compared to other savings options?

• They can invest in stocks

• They are considered cash equivalents but have investment risks

• They offer FDIC insurance

• They have fixed interest rates

Why might someone choose a high yield savings account over other options?

• They offer the highest interest rates available

• They guarantee returns on investment

• They are the safest form of investment

• They provide more flexibility without investment risks

Why might someone avoid constantly switching banks for better savings rates?

• Switching banks involves high fees

• It is illegal to switch banks frequently

• Interest rates are the same at all banks

• Banks often lower rates shortly after raising them