Chapter 6, Problem 5AA

To determine

To choose: The best suited option to fill the blank.

Explanation of Solution

An interest-bearing financial asset owned by a bank or another financial institution is a savings account. Although these accounts usually pay a moderate interest rate, they make them a great choice for parking cash that a person wants to be ready for short-term needs, their efficiency and reliability.

Savings plans have some limits on how often an individual can withdraw cash, but they generally have excellent flexibility that is ideal for building an emergency fund, saving for a short-term objective such as purchasing a new car or going on vacation, or just sweeping extra cash that a person doesn't want in his confirmation account so that he can get more interest otherwise.

To prevent paying fees, a minimum balance must be held in certain forms of savings accounts.