Computers and Technology


Jorge has $300 for work he performed. He expects to spend the money in the next few weeks to buy a new bike. Which type of account will be best for Jorge?
A Certificate of Deposit (CD)

B Money Market Account

C Savings Account

D Checking Account

2 Answer

  • The correct option is C, that is saving account.
    Saving account is a type of account which allows one to save money while at the same time one earn interest on it,. Saving account allow one to withdraw as frequently as one want without any limitation;
  • The correct answer is option (C)

    Savings Account is the best account Jorge can open to save his money for purchasing a new bike.

    Further Explanation:

    A: Certificate of Deposit (CD)

    When a person needs to save his money, but along with that the maturity should be short then they invest in CDs. But commonly banks use this account to meet their short-term needs. These accounts are insured as ‘money in the bank’ and thus they are virtually risk-free. Also, these accounts do not pay huge interest rates, so it is not suitable for Jorge to open this type of account.

    Therefore, this option is incorrect.

    B: Money Market Account

    It is a type of account which pay interest on the deposits based on the interest rates prevailing in the money market. Jorge should not deposit his money into this account because there might be chances that when he deposits the money, the interest rate might go down and he will not receive a good amount of interest on his saving deposits.

    Therefore, this option is incorrect.

    C: Savings Account

    It is the type of account which is opened by common individuals to save their deposits with the bank and side by side earn the interest on the money deposited. Mostly people use this account to save money for the things they want to purchase and earn a good amount of interest on their savings. Jorge should open this account as this is the best option to save his money for the new bike.

    Therefore, this option is correct.

    D: Checking Account

    It is also a similar account to savings account but in this type of account you cannot withdraw any cash from the account instead an individual needs to pay a cheque to the other person for any payment or use any electronic mode of payment. Jorge should not open this account because if he needs any emergency need of cash in hand from that account then he will not be able to do that because he will not be allowed to withdraw cash in hand.

    Therefore, this option is incorrect.

    Learn more:

    1. Learn more about the low liquidity bank accounts

    2. Learn more about the traditional saving account

    3. Learn more about the role of money

    Answer details:

    Grade: High School

    Subject: Business Studies

    Chapter: Money and Banking

    Keywords: savings account, money market account, certificate of deposits, checking account, new bike, savings for the bike, interest rates.