Because certificates of deposit require that the deposited funds remain on deposit for a specified period of time they are subject to
A)interest rate risk.
B)fixed withdrawal risk.
C)market risk.
D)systemic risk.

Question

Quizplus · Accepted Answer

Certificates of deposit (CDs) usually have a fixed maturity date and a fixed interest rate. This means that if interest rates in the broader economy rise, the interest rates offered on new CDs may also rise, making older CDs less attractive. This results in the interest rate risk for the investor who may be stuck earning a lower interest rate. Additionally, if the investor needs to access the funds before the maturity date, they may suffer a penalty which is also an example of interest rate risk.

Because Certificates of Deposit Require That the Deposited Funds Remain