Question

Rate the following bank accounts from most to least liquid:
CD
Savings account
Checking account
Money market account
A. CD, savings account, checking account, money market account
B. Savings account, checking account, CD, money market account
C. CD, money market account, savings account, checking account
D. Checking account, savings account, money market account, CD

Answer 1

Liquidity refers to how easily an asset can be converted into cash without significant loss of value. Based on the typical characteristics of the accounts listed, the ranking from most to least liquid is as follows:

1. **Checking account** - Most liquid, as it allows immediate access to funds for transactions.
2. **Savings account** - Accessible with some limitations, but generally can be accessed quite easily.
3. **Money market account** - Typically allows for limited check-writing and may have some restrictions on withdrawals, making it less liquid than a savings account.
4. **CD (Certificate of Deposit)** - Least liquid, as funds are usually locked in for a fixed term and withdrawing funds early usually incurs a penalty.

So the correct answer is:

**D. Checking account, savings account, money market account, CD**.