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Questions
Mention two differences between fixed deposits and demand deposits.
Differentiate between Demand deposit and Fixed deposit (Three points)
Distinguish between demand deposits (current deposits) and fixed deposits (term deposits).
State two differences between fixed deposits and demand deposits.
Solution 1
Differences between demand deposits and fixed deposits:
- The interest rate on demand deposits is very low, whereas fixed deposits carry a higher interest rate.
- Demand deposits can be withdrawn at any time, whereas fixed deposits can be withdrawn only after the expiry of a specific period.
Solution 2
| Demand Deposit | Fixed Deposit | |
| 1. | A depositor can withdraw the money from such deposits at any time. | A depositor can withdraw the money from such deposit generally only after the period of time agreed upon by the bank and the depositor. |
| 2. | Usually no interest or very low interest is paid by the bank on such deposits. | The interest rates are higher in case of such deposits. |
| 3. | This deposit does not help depositors' money to grow effectively. | This deposit helps depositors' money to grow effectively. |
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