Certificates of deposit (CDs) tend to pay higher rates of interest than money market accounts because
A)CDs are not government insured and therefore are riskier investments than money market accounts.
B)the required minimum investment for CDs is higher than for money market accounts.
C)there are higher annual fees charged for CDs than for money market accounts.
D)the investor agrees to leave his or her money in the CD for a specified period of time while he or she has free access to the funds in a money market account.

Question

Quizplus · Accepted Answer

CDs require the investor to leave their money invested for a specified period of time, while money market accounts allow for free access to funds. This makes CDs less liquid and therefore, lenders are willing to pay a higher interest rate.

Certificates of Deposit (CDs) Tend to Pay Higher Rates of Interest