Question

what is a certificate of deposit (cd)? *
a. a highly liquid account that allows unlimited withdrawals and transfers.
b. a time - restricted savings account where your money is held for a specific period in exchange for a guaranteed fixed yield.
c. an account whose apy is variable and can change at any time.
d. a personal retirement account sponsored by your employer.

what is a 401(k) retirement plan? *
a. an account geared strictly towards retirement that is sponsored by your employer.
b. a personal retirement account that is independent of an employer.
c. a low - risk, interest - bearing account designed for short - term savings goals.
d. a certificate of deposit with a term of four years and one month.

Explanation:

First Question: What is a Certificate of Deposit (CD)?

• Option A: A highly liquid account with unlimited withdrawals/transfers does not match CD's nature (CDs have withdrawal restrictions).
• Option B: CDs are time - restricted savings accounts where money is held for a specific period (like 6 months, 1 year, etc.) in return for a guaranteed fixed yield. This matches the definition of a CD.
• Option C: CDs have a fixed APY (Annual Percentage Yield) for the term, not a variable one that changes at any time.
• Option D: A personal retirement account sponsored by an employer is a 401(k) or similar, not a CD.

• Option A: A 401(k) is a retirement account sponsored by an employer, designed for retirement savings. This is correct.
• Option B: A personal retirement account independent of an employer is an IRA (Individual Retirement Account), not a 401(k).
• Option C: A 401(k) is for long - term retirement savings, not a short - term savings account.
• Option D: A 401(k) is not a Certificate of Deposit.

Answer:

B. A time - restricted savings account where your money is held for a specific period in exchange for a guaranteed fixed yield.

Second Question: What is a 401(k) Retirement Plan?