Question

The most important reason for an investor to prefer a Bank deposit is _________.

• A. The credit worthiness of the Bank.
• B. The Bank does not invest in the securities.
• C. The Bank offers a guarantee.
• D. All of the above.

Answer 1

Answer: (A)

The credit worthiness of the Bank.

Creditworthinessis how a lender determines that you will default on your debt obligations, or how worthy you are to receive new credit. Your creditworthiness is what creditors look at before they approve any new credit to you.

Banksoffer lower interest rates on saving account as compared to term deposits. It is because of this reason, investors opt for term deposit accounts.