Which is more likely to give you a greater rate of return: a checking deposit at a bank or the purchase of a corporate bond?

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Kaiya

Business

26 February, 14:56

Which is more likely to give you a greater rate of return: a checking deposit at a bank or the purchase of a corporate bond?

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Cameron Ortiz · Answer 1

A corporate bond would give the higher rate because it would be for a minimum term like say 1 year whereby the financial institution can lend out the money to someone else and from the interest on that can pay a significant return whereas interest on a chequing account will be very low since the balance will go up and down over a month or year so there is no guarantee to the financial institution of having the money long enough to earn some money on it.