Certificates of Deposit Differ from Demand Deposits in That They

question 67

Multiple Choice

Certificates of deposit differ from demand deposits in that they

• A)do not pay interest.
• B)have penalties for early withdrawal.
• C)are sold only by S&Ls.
• D)pay non-taxable interest.

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Definitions:

Monthly Interest Rate

It's the interest rate applied each month on loans, savings, or investments, calculated by dividing the annual interest rate by 12.

Probability Of Default

The likelihood that a borrower will be unable to meet its debt obligations.

EOQ

Economic Order Quantity, a formula used to determine the ideal quantity of inventory to minimize total costs related to ordering, receiving, and holding inventory.