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Which of the following best explains why fixed deposits are considered low-risk investments?

medium Q4 of 15
Banking Awareness - Types Of Bank Accounts
Which of the following best explains why fixed deposits are considered low-risk investments?
AReturns depend on market performance
BInterest rate changes daily
CFunds are insured by default
DReturns are fixed in advance
Step-by-Step Solution

  1. Step 1: Identify risk factor.

    Market-linked returns increase risk.

  2. Step 2: Check FD characteristic.

    FD returns are fixed at the start.

  3. Final Answer:

    Returns are fixed in advance → Option D

  4. Quick Check:

    Fixed returns reduce uncertainty and risk ✅
Quick Trick: Fixed return = low risk.
Common Mistakes:
MISTAKES
  • Linking FD returns with market movements.
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