When You Invest in a CD That Has a Maturity

question 79

Multiple Choice

When you invest in a CD that has a maturity of one year, you are guaranteed the interest rate offered on that CD. Your return would be

• A) a risk premium.
• B) money in the bank.
• C) a risk-free return.
• D) liquid assets.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business, whichever is longer.

Reversing Entries

These are accounting journal entries that reverse a previous entry, usually made at the beginning of a new accounting period to simplify record-keeping.

Work Sheet

An informal document used by accountants and auditors for preparing financial statements and ensuring the correctness of accounts.

Post-Closing Trial Balance

A listing of all accounts and their balances after closing entries are made, serving as a check to ensure that debits equal credits.