Why are passbook savings generally less liquid than demand deposits and NOW accounts?
A)They are noncheckable.
B)They usually involve physical presence at the institution for withdrawal.
C)The DI has the legal power to delay payment for as long as one month.
D)They tend to pay higher interest rates than demand deposits and NOW accounts.
E)All of the options.

Question

Quizplus · Accepted Answer

Passbook savings accounts are considered less liquid than demand deposits and NOW accounts because they are noncheckable (A), often require the account holder's physical presence at the financial institution for withdrawals (B), and the depository institution (DI) may legally delay payment for up to one month (C). Additionally, they typically offer higher interest rates (D), which is a factor that can influence their liquidity compared to demand deposits and NOW accounts.

Why Are Passbook Savings Generally Less Liquid Than Demand Deposits