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

what is the most suitable option for norm to invest his $15,000, considering his daughters 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

what is the most suitable option for norm to invest his $15,000, considering his daughters 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

Answer

Explanation:

Step1: Consider daughter's college plans

Since daughter's college plans are upcoming, the money may be needed soon. So, an investment with high - liquidity is preferred.

Step2: Analyze each option

  • Option a: A four - year CD has a substantial early - withdrawal penalty, which is not suitable if money may be needed before 4 years.
  • Option b: An online savings account offers 2.3% interest and has relatively high liquidity.
  • Option c: A money market account with 3.5% interest has a three - month commitment, but still may not be as liquid as a savings account if immediate access is required.
  • Option d: A checking account with no monthly fees usually has very low or no interest, and is mainly for day - to - day transactions, not for investment.

Answer:

B. An online savings account offering 2.3% interest