A time deposit that is non-negotiable but allows a depositor to switch to a higher interest rate if market interest rates rise is called a:
A)negotiable CD.
B)bump-up CD.
C)step-up CD.
D)liquid CD.
E)None of the options is correct.

Question

Quizplus · Accepted Answer

A bump-up CD (also known as a step-up CD) allows the depositor to request a higher interest rate if market interest rates increase. This is not possible with a traditional non-negotiable time deposit (such as option A). A liquid CD (option D) allows for penalty-free withdrawals but does not necessarily offer a bump-up feature.

A Time Deposit That Is Non-Negotiable but Allows a Depositor