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Chapter 17: Q.20 (page 426)

Name several different kinds of bank account. How are they different?

Short Answer

Expert verified

Checking, savings, and certificate of deposit are the three types of accounts.

Step by step solution

01

Step 1. Definition of bank of account

a bank account is a customer's financial account that is kept by the bank.

02

Step 2.Explanation

These are checking account, savings account, and certificate of deposits.

Checking account is for business class. An individual can keep the money. Some banks offer interest rate on accounts as well. The account holder gets a cheque book, and a debit card against the account. It is compulsory to have a checking account in the name of company as all transactions will get recorded.

Savings account is for households and individuals. They get interest rate and can save their money.

Another way of saving money is certificate of deposit. This is where a certain amount of money can be kept in the account for a stated period of time at a higher rate of interest than holding a savings account. Early withdraw is not encouraged. If it occurs there will be a penalty.

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Most popular questions from this chapter

Imagine that a local water company issued \(10,000 ten-year bond at an interest rate of 6%. You are thinking about buying this bond one year before the end of the ten years, but interest rates are now 9%.

a. Given the change in interest rates, would you expect to pay more or less than \)10,000 for the bond?

b. Calculate what you would actually be willing to pay for this bond.

Why are bonds somewhat risky to buy, even

though they make predetermined payments based on a fixed rate of interest?

Why can firms not just use their own profits for financial capital, with no need for outside investors?

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