Interest rates on longer-term CDs are usually higher than the comparable rates on shorter-term instruments.

Question

Quizplus · Accepted Answer

This is generally true because banks and other financial institutions are willing to pay a higher interest rate to customers who are willing to leave their money invested for a longer period of time. This allows the institution to use the funds for a longer term and have a more predictable source of financing.

Interest Rates on Longer-Term CDs Are Usually Higher Than the Comparable