Question

Sally recently received a gift of $10,000 from her aunt to be used for her college education. Since college is almost a year away, Sally should probably put her gift into a
A) savings account.
B) checking account.
C) Money Market account.
D) Certificate of Deposit.

Answer 1

halp
@563blackghost @LootAtTheTime

Answer 2

From Google:

"A Money Market Account (MMA) is a type of savings account that usually earns a higher amount of interest than a basic savings account. The minimum deposit and balance for this account is often considerably higher than the minimum balance of a basic savings account."

Answer 3

Certificate of Deposit (is a timed deposit) which has "a specific, fixed term (often one, three, or six months, or one to five years) and, usually, a fixed interest rate. The bank intends that the customer hold the CD until maturity, at which time they can withdraw the money and accrued interest."

Answer 4

It would make sense for the aunt to have done a CD, but since the money was already received, she should put the money in an MMA for the interest since 10k is a lot of money. She likely has already met the considerable minimum balance requirement.

Answer 5

Definitions for Savings and Checkings Account

Savings Account:

"the most basic type of account at a bank or credit union, allowing you to deposit money, keep the funds safe, and withdraw funds as needed. Savings accounts typically pay interest on your deposits, which helps you grow your money, but rates are relatively low on these low-risk accounts."

Checking Account:

"an account at a bank against which checks can be drawn by the account depositor."