How Do Money Market Accounts Compare with Checking Accounts

question 29

Multiple Choice

How do money market accounts compare with checking accounts?

• A) They usually pay a lower rate of interest
• B) Checks must usually be written for a higher minimum amount
• C) Money market accounts usually do not require a minimum balance
• D) Neither type of account limits the number of checks that can be written each month

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Definitions:

Time Value

The concept that money available today is worth more than the same amount in the future due to its earning potential.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Payback Period

The length of time required to recover the cost of an investment or determine how long it takes for an asset to generate enough cash flow to cover its original cost.

Cost Recovery

The process by which an entity regains the capital expenditure of an investment over time, through various methods such as depreciation, amortization, or depletion.