Which of the following is true of a certificate of deposit?
A) It is a promise to pay.
B) It is used to extend credit to a buyer.
C) It is a three-party instrument.
D) It is a savings account passbook.

Question

Quizplus · Accepted Answer

A certificate of deposit (CD) is a savings certificate that has a fixed term and a fixed interest rate. It is issued by banks and other financial institutions and is a promise to pay the holder the principal plus interest earned upon maturity of the CD. It is not used to extend credit to a buyer, it is not a three-party instrument, and it is not a savings account passbook.

Which of the Following Is True of a Certificate of Deposit