The Primary Difference in Certificates of Deposit (CDs) That Are

question 36

Multiple Choice

The primary difference in certificates of deposit (CDs) that are equal to or less than $100,000 and those over $100,000 (other than the amount) is:

• A)A bank does not have to include CDs equal to or less than $100,000 in its liabilities
• B)CDs greater than $100,000 are negotiable and therefore can be bought and sold
• C)CDs equal to or less than $100,000 are issued for only six months or less
• D)CDs greater than $100,000 are issued for only six months or less

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Definitions:

Annual Payments

Payments that are due once per year, commonly used in the context of loans, leases, or other financial agreements.

Compounded Annually

Refers to the process of calculating and adding interest to the principal amount of an investment or loan once per year.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow funds over a similar term, and with a similar security, to lease a comparable asset.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position at a particular point in time, showing assets, liabilities, and shareholders' equity.