Question

Which of the following are advantages of certificates of deposit (CDs) over savings accounts?

I. CDs are more readily accessible than savings accounts.
II. CDs offer greater interest rates than savings accounts.
III. CDs have greater FDIC backing than savings accounts.
a.
I and II
b.
II only
c.
I and III
d.
none of these

Answer 1

b. II only

Explanation: CDs typically pay higher interest than regular savings accounts. They are less accessible (funds are locked for a term and early withdrawal may incur penalties), and FDIC insurance coverage is the same for CDs and savings accounts (subject to the same limits).