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QuizMultiple Choice

Investing and Financial Markets — Unit test

Question 1 • Personal Finance - EL3403

In which situation would a certificate of deposit (CD) be the best banking choice?

Answer
A
Samuel is setting money aside but still needs emergency access to it.
B
Hafsa wants a guaranteed return, and won’t need the money for several years.
C
Darren is looking for an investment that has a very high interest rate.
D
Raj is looking for an investment with a fast return so he can reinvest.

Explanation

A certificate of deposit is best when you can leave money untouched for a set term in exchange for a guaranteed interest rate. Hafsa won’t need the money for several years, so a CD fits her needs. Samuel needs emergency access, and early CD withdrawals may incur penalties; a CD also does not necessarily offer a very high rate or a fast return.

AI-written and checked against the verified answer.

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