what is the most suitable option for norm to invest his $15,000, considering his daughter’s upcoming college…

what is the most suitable option for norm to invest his $15,000, considering his daughter’s upcoming college plans and the associated interest rates?\na. a four-year cd paying 4.8% interest, with a substantial penalty for early withdrawal\nb. an online savings account offering 2.3% interest\nc. a money market account paying 3.5% interest, renewable for three-month commitments\nd. a checking account with no monthly fees\n\nplease select the best answer from the choices provided\n\n○ a\n○ b\n○ c\n○ d

what is the most suitable option for norm to invest his $15,000, considering his daughter’s upcoming college plans and the associated interest rates?\na. a four-year cd paying 4.8% interest, with a substantial penalty for early withdrawal\nb. an online savings account offering 2.3% interest\nc. a money market account paying 3.5% interest, renewable for three-month commitments\nd. a checking account with no monthly fees\n\nplease select the best answer from the choices provided\n\n○ a\n○ b\n○ c\n○ d

Answer

Brief Explanations:

To determine the best investment for Norm's $15,000 for his daughter's upcoming college plans, we analyze the options:

  • Option A: A four - year CD with 4.8% interest. Since college plans are upcoming, if the college money is needed within four years, the early withdrawal penalty is a concern. But if the daughter's college is in about four years, this CD offers a relatively high interest rate.
  • Option B: An online savings account with 2.3% interest. The interest rate is lower than that of the CD and the money market account.
  • Option C: A money market account with 3.5% interest and three - month commitments. While it is more liquid than a CD, its interest rate (3.5%) is lower than the CD's 4.8%.
  • Option D: A checking account with no monthly fees. Checking accounts typically offer very low or no interest, so it is not a good investment option for growing the $15,000.

Among these, the four - year CD (Option A) has the highest interest rate. If the timing of college expenses aligns with the four - year term (or if Norm can afford to keep the money in the CD for four years without needing to withdraw early), it is the most suitable as it will grow the money more than the other options.

Answer:

A. A four - year CD paying 4.8% interest, with a substantial penalty for early withdrawal