Money Market Accounts vs CDs Quiz

What is a primary advantage of money market accounts over CDs?

• Higher fixed interest rates

• Easier access to funds

• Longer maturity periods

• No withdrawal limits

Which financial product typically offers a higher interest rate?

• Savings account

• Money market account

• Certificate of Deposit (CD)

• Checking account

What is a common feature of money market accounts?

• Fixed interest rates

• No access to funds until maturity

• Availability of a debit card

• Unlimited monthly transactions

What does FDIC insurance cover in relation to money market accounts and CDs?

• Only the principal amount

• Both principal and earned interest

• Only earned interest

• Neither principal nor interest

In what scenario might a CD be a better choice than a money market account?

• When you need frequent access to funds

• When you want to lock in a high APY

• When you prefer variable interest rates

• When you need a debit card

What is the penalty for withdrawing money from a CD before its maturity?

• A small fee

• A penalty is typically imposed

• No penalty

• Loss of all interest earned

How do money market accounts typically determine their interest rates?

• They are fixed for the account's lifetime

• Adjusted monthly by the bank

• Variable based on market conditions

• Set by the Federal Reserve

Which statement is true about the accessibility of funds in a money market account?

• Funds are inaccessible until maturity

• There are typically limits on monthly transactions

• Unlimited withdrawals are permitted

• Funds can only be accessed by visiting the bank

What does a "CD ladder" strategy involve?

• Staggering CD maturity dates

• Investing all funds into one long-term CD

• Using CDs for short-term investments

• Avoiding CDs for better liquidity

Which account type is better suited for an emergency fund?

• CD

• Money market account

• Fixed deposit account

• Long-term bond