Question

what is the maximum amount typically protected by fdic insurance per account category?
a. $100,000
b. $150,000
c. $200,000
d. $250,000

what is the potential disadvantage of choosing a certificate of deposit (cd) over a regular savings account?
a. cds have early withdrawal penalties.
b. cds are not fdic insured.
c. cds typically have lower interest rates.
d. cds require higher minimum deposits.

Explanation:

First Question (FDIC Insurance Amount)

The FDIC (Federal Deposit Insurance Corporation) typically insures up to $250,000 per account category in the United States. This is a standard rule for deposit insurance to protect depositors' funds.

• Option A: CDs have early withdrawal penalties, meaning if you need to access your money before the CD matures, you'll face a financial penalty. Regular savings accounts allow more flexible withdrawals.
• Option B is incorrect as CDs at FDIC - insured banks are FDIC - insured.
• Option C is incorrect as CDs typically have higher interest rates than regular savings accounts.
• Option D is not a universal disadvantage as many banks offer CDs with low minimum deposits, and it's not the primary disadvantage compared to early withdrawal penalties.

Answer:

D. $250,000

Second Question (Disadvantage of CD over Savings Account)