Which statement correctly describes bank deposit accounts?

Which statement correctly describes bank deposit accounts?

• A. Money market deposits offer instant access.
• B. Bank deposit accounts provide instant access with low returns.
• C. Bank deposit accounts require funds to be locked until maturity.
• D. Money market deposits must remain until maturity.

Answer: (B)

Bank deposit accounts are designed for everyday use with high liquidity and low risk. They let you access funds instantly, for example to withdraw cash or pay bills, which is why they are described as highly liquid. Because the funds are readily available and the risk is low, the returns offered are typically modest. This combination—immediate access to funds and low yields—best describes these accounts. The other statements mix up liquidity and maturity: funds aren’t usually locked until a fixed date for standard bank deposits, and money market deposits aren’t universally guaranteed to be instantly accessible in all circumstances.

Bank deposit accounts are designed for everyday use with high liquidity and low risk. They let you access funds instantly, for example to withdraw cash or pay bills, which is why they are described as highly liquid. Because the funds are readily available and the risk is low, the returns offered are typically modest.

This combination—immediate access to funds and low yields—best describes these accounts. The other statements mix up liquidity and maturity: funds aren’t usually locked until a fixed date for standard bank deposits, and money market deposits aren’t universally guaranteed to be instantly accessible in all circumstances.