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Multiple Choice
Which type of account typically requires you to keep your money deposited for a fixed period, often with penalties for early withdrawal?
A
Certificate of Deposit (CD)
B
Traditional Savings Account
C
Money Market Account
D
Checking Account
Verified step by step guidance
1
Understand the key characteristics of each account type mentioned in the problem: Certificate of Deposit (CD), Traditional Savings Account, Money Market Account, and Checking Account.
Recognize that a Certificate of Deposit (CD) is a type of account where money is deposited for a fixed period, and early withdrawal often incurs penalties. This is a defining feature of CDs.
Compare this feature with the other account types: Traditional Savings Accounts, Money Market Accounts, and Checking Accounts, which typically allow more flexibility in accessing funds without penalties.
Identify that the question is asking for the account type that specifically requires a fixed deposit period and imposes penalties for early withdrawal, which aligns with the characteristics of a Certificate of Deposit (CD).
Conclude that the correct answer is 'Certificate of Deposit (CD)' based on the analysis of the account features provided in the question.