Banking Awareness - Types Of Bank Accounts
Which decision best reflects the liquidity–return trade-off principle?
Which decision best reflects the liquidity–return trade-off principle?
hard Q10 of 15
Step-by-Step Solution
Step 1: Recall the trade-off.
Higher returns usually require sacrificing liquidity.Step 2: Identify matching choice.
Time deposits lock money to earn higher interest.Final Answer:
Choosing time deposit for higher interest by accepting lock-in → Option DQuick Check:
Lock-in accepted = higher return achieved ✅
Quick Trick: Return increases when liquidity is sacrificed.
Common Mistakes:
- Expecting high returns with full liquidity.
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