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Income Beginner: Introduction to Deposit Accounts

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1.
Which of the following is a reason an investor might open a deposit account?
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All of the above. Investors open deposit accounts for all of these reasons.
2.
All of the following are advantages of deposit accounts except _______.
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High rates of return. High rates of return are not an advantage of deposit accounts, which typically pay lower returns than other investment opportunities.
3.
Because deposit accounts pay relatively low yields, investors have little need of them.
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False. Deposit accounts can be useful tools for accumulating investment capital, sheltering funds during market downturns, and maintaining a supply of liquid cash.
4.
Funds 'swept' from your asset management account are deposited into _______.
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A money market account. This lets unallocated funds earn a higher rate.
5.
The simplest kind of deposit account to set up and maintain is a _______.
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Passbook account. A passbook account is easy to start, offers immediate access to funds, and requires low minimum balances.