Question

A certificate of deposit represents:

A. A promissory note of payment by the issuing institution to the investor.

B. A time deposit of a state government with the federal government.

C. A deposit in a checking account in a bank.

D. A time deposit at a bank or other financial intermediary.

E. A promissory note of payment by a bank that borrows reserves from another bank.

Answer 1

Answer is D : A time deposit at a bank or other financial intermediary .

A certificate of deposit (CD) is a time deposit, a financial product commonly sold in the United States and elsewhere by banks, thrift institutions, and credit unions.

CDs are similar to savings accounts in that they are insured "money in the bank" and thus virtually risk free. In the USA, CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for banks and by the National Credit Union Administration (NCUA) for credit unions. They differ from savings accounts in that the CD has a specific, fixed term (often one, three, or six months, or one to five years) and, usually, a fixed interest rate. The bank intends that the customer hold the CD until maturity, at which time they can withdraw the money and accrued interest.