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Certificates of Deposit(CDs) offered by banks have a penalty for early withdrawal. For example, if you invest $1000 in a one-year CD paying 5% interest,
Certificates of Deposit(CDs) offered by banks have a penalty for early withdrawal. For example, if you invest $1000 in a one-year CD paying 5% interest, you receive less interest if you withdraw your savings before the end of a year. Why are investors willing to accept a lower interest rate(say, 3.25%) on savings accounts without a penalty for early withdrawal?
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