Multiple Choice
Which type of credit is described as one where the lender does not require the borrower to provide a security deposit or collateral?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Which type of account should Becky choose if she wants to access and spend her money as frequently as she needs?
A
Checking account
B
Certificate of deposit (CD)
C
Savings account
D
Money market account
Verified step by step guidance1
Understand the purpose of each account type: A checking account is designed for frequent access and spending, while other accounts like savings accounts, CDs, and money market accounts are typically used for saving and may have restrictions on withdrawals.
Evaluate Becky's needs: Since Becky wants to access and spend her money as frequently as she needs, she requires an account with high liquidity and no withdrawal restrictions.
Compare account features: Checking accounts allow unlimited transactions and are ideal for daily expenses. Savings accounts may limit withdrawals, CDs lock money for a fixed term, and money market accounts often have transaction limits.
Identify the best match: Based on Becky's requirement for frequent access, a checking account is the most suitable option.
Conclude the reasoning: Becky should choose a checking account because it provides the flexibility to access and spend money without restrictions, meeting her needs effectively.
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