Why are passbook savings generally less liquid than demand deposits and NOW accounts?
A)They are noncheckable.
B)They usually involve physical presence at the institution for withdrawal.
C)The DI has the legal power to delay payment for as long as one month.
D)They tend to pay higher interest rates than demand deposits and NOW accounts.
E)All of the above.

Question

Quizplus · Accepted Answer

Passbook savings accounts are less liquid because they are noncheckable, often require physical presence for withdrawal, and the depository institution can legally delay payment. Additionally, they tend to offer higher interest rates, which compensates for the reduced liquidity.

Why Are Passbook Savings Generally Less Liquid Than Demand Deposits