Question

Ariel is saving money to purchase a new computer before she leaves for college in two years. She wants to open a special account at a depository institution to keep her saved money safe. She has asked you for advice on which type of account would be best for her. What would be the best advice for Ariel?a. Check several depository institutions and choose one with a free, no‐interest checking account. That way, when Ariel has saved enough for her computer she can simply write a check to pay for it.
b. Shop around for the depository institution with the highest interest rates for their savings accounts. She would be able to make regular savings deposits and earn interest while she is saving up for the computer.
c. Look for a Credit Union that offers share draft accounts. These secure accounts are designed especially for saving for long‐term financial goals.
d. Shop around for a depository institution that offers safe deposit boxes. These accounts offer extra security for deposits and can be set up to allow her to withdraw her money when she needs it.

Answer 1

Answer:

b. Shop around for the depository institution with the highest interest rates for their savings accounts. She would be able to make regular savings deposits and earn interest while she is saving up for the computer.

Explanation:

Firstly, depository institutions are instiutions that are legally allowed to accept monetary deposits from customer. Examples savings bank, loan banks e.t.c

However, Ariel is better off depositing her money in a financial institution that will yield high interest for her and enable better save to purchase her dream computer.