A Certificate of Deposit That Has Earnings Based on the Stock

question 25

Multiple Choice

A certificate of deposit that has earnings based on the stock market is called a (n)

• A) Bump-up CD.
• B) Callable CD.
• C) Portfolio CD.
• D) Promotional CD.
• E) Indexed CD.

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Definitions:

Portfolio Beta

A measure of a portfolio's volatility or systemic risk compared to the overall market; a beta above 1 indicates higher than market volatility.

Risk-free Rate

The theoretical return on investment with no risk of financial loss, often represented by the yield of government bonds like U.S. Treasury bills.

Expected Market Rate

The anticipated rate of return that investors predict to receive from the market as a whole over a specific period.

Myopic Behavior

Short-sighted decision-making focusing on immediate benefits rather than considering long-term consequences, often seen in investment choices.