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Income Beginner: Introduction to Deposit Accounts

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1.
Deposit accounts can be appropriate for investors with low risk tolerance.
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True. The high degree of security they provide make deposit accounts an effective alternative for those who can't afford to lose their capital.
2.
The higher the interest/dividend rate paid, the higher the minimum balance a deposit account usually requires.
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True. The tradeoff for higher earnings rates is letting the financial institution hold more of your money.
3.
Asset management accounts make tax preparation easy.
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True. Combined statements listing all your financial transactions make it easy to find the information you need to prepare your return.
4.
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.
5.
High-balance deposit accounts typically charge penalties for early withdrawal.
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False. Your money is always available.