In the Context of Financial Securities, Certificates of Deposit

question 79

Multiple Choice

In the context of financial securities, certificates of deposit:

• A) with longer maturities typically earn a higher interest rate than certificates of deposit that have shorter terms.
• B) can be cashed in before they mature without incurring any penalty.
• C) offer higher returns than most other types of investments.
• D) are not insured by the Federal Deposit Insurance Corporation, making them the least safe investment option.

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Definitions:

Bond Issuer

The entity, either a company or government, that borrows funds by issuing bonds.

Bond Premium

The additional amount paid over the face value of a bond, reflecting market interest rates lower than the bond's coupon rate.

Liability

Financial obligations or debts owed by a company to external parties, such as loans, accounts payable, or mortgages.

Annual Amortization

The process of spreading out a loan into a series of fixed payments over a period, with each payment covering part of the principal amount and interest.