A special form of note created when a person deposits money at a financial institution in exchange for the institution's promise to pay back the amount of the deposit plus an agreed-upon rate of interest upon the expiration of a set time period agreed upon by the parties is known as a ________.
A) collateral note
B) check
C) certificate of deposit
D) bill of exchange

Question

Quizplus · Accepted Answer

A certificate of deposit (CD) fits the description given in the question. It is a financial instrument in which an individual deposits a fixed amount of money with a financial institution for a set period of time, and in return, the institution pays a fixed interest rate. CDs typically have higher interest rates than savings accounts and are considered a low-risk investment.

A Special Form of Note Created When a Person Deposits