Tom and Mindy want to keep $420,000 in cash equivalents that are federally insured.They could accomplish this by
A)investing $170,000 in a money market mutual fund and $250,000 in a federally insured credit union.
B)dividing it equally into three different joint accounts in the same federally insured bank.
C)dividing it equally into two different joint accounts in two different federally insured savings banks.
D)putting $75,000 in two joint accounts in different branches of the same bank.

Question

Quizplus · Accepted Answer

Option C is the best choice because it divides the money into two different federally insured savings banks. This provides diversification and reduces the risk of losing all the money in the unlikely event that one bank fails. Options A and B also provide diversification but they do not involve two different savings banks. Option D is not as good because it only involves one bank, although the money is spread across different branches.

Tom and Mindy Want to Keep $420,000 in Cash Equivalents