Question

What might be the savings goal for a person who buys a five-year CD paying 4.67 percent instead of an 18-month savings certificate paying 3.29 percent?

i just do not get this

Answer 1

This is not my field, but I'll give you some possible ideas.

You are describing someone who is willing to have his money tied up for a longer period of time (a 5-yr CD) for a higher rate of interest, not a person who wants a faster turnaround for a lower rate of interest. Therefore, this person might be --

**a person who will retire in 5-6 years.
**a person who has a child who will enter college in 5-6 years.
**a person who plans to look for a home to buy in 5-6 years.
**etc. (What are other financial goals people have?)