The correct answer to the question is:
D) A money market deposit account
Explanation:
1. A money market deposit account typically pays a higher rate of interest than a NOW account. Money market deposit accounts often offer higher interest rates because they require a higher minimum balance and have limitations on withdrawals compared to NOW accounts.
2. However, a money market deposit account usually pays a lower rate of interest than a certificate of deposit (CD). CDs typically offer higher interest rates than money market deposit accounts because they require you to deposit money for a specific term, such as 6 months or 1 year, without withdrawal.
In summary, a money market deposit account falls between a NOW account and a certificate of deposit in terms of the interest rates it offers, making it the option that typically pays a higher rate of interest than a NOW account but a lower rate of interest than a certificate of deposit.