Income Beginner: Introduction to Deposit Accounts

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1.
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.
2.
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.
3.
All of the following are advantages of asset management accounts, except _______.
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Low minimum balances. Low minimum balances are not a feature of asset management accounts.
4.
High-balance deposit accounts typically charge penalties for early withdrawal.
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False. Your money is always available.
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.