Personal Finance 1st Edition by Jack R. Kapoor

Exercise 6

1     When would you prefer a savings plan with high liquidity over one with a high rate of return?

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2     What is the relationship between compounding and the future value of an amount?

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3    How do inflation and taxes affect earnings on savings?

Action Application Contact local financial institutions to determine current rates earned on money market accounts and other savings plans. Compare these rates with similar accounts that you research online.

Step 1 of 3

1. I would prefer a savings plan with high liquidity over one with a high rate of return when i need to have access to my savings funds in the near future.. Liquidity will allow me to withdraw money on short notice without a loss of principal or fees.