Which of the following correctly describes a certificate of deposit?
A) It is a draft that is payable by a bank.
B) It is not considered to be a negotiable instrument.
C) It is a note that is payable on demand.
D) It is a note where the depositor is the payee.
E) It is a money order where the drawee is a bank.

Question

Quizplus · Accepted Answer

A certificate of deposit (CD) is a note where the depositor is the payee. It is a type of time deposit offered by banks where a fixed amount of money is invested for a specified period, earning a fixed interest rate. The depositor cannot withdraw the funds before the maturity date without incurring a penalty.

Which of the Following Correctly Describes a Certificate of Deposit