Question : Which of the following is a feature of a fixed deposit account?
Option 1: Flexible maturity period
Option 2: Withdrawals allowed at any time
Option 3: Low interest rate
Option 4: Penalty for premature withdrawal
Correct Answer: Penalty for premature withdrawal
Solution : The correct answer is (d). Penalty for premature withdrawal
A fixed deposit account, also known as a term deposit or time deposit, is a type of investment account offered by banks and financial institutions. It allows individuals to deposit a specific amount of money for a predetermined period, known as the maturity period, at a fixed interest rate.
If an account holder chooses to withdraw funds from a fixed deposit account before the maturity date, banks may impose a penalty or reduction in the interest rate earned. This penalty discourages early withdrawals and ensures that the account holder honors the commitment of keeping the funds deposited for the agreed-upon duration.
