Wilma Has a $25,000 Certificate of Deposit (CD) at the Local

question 26

Multiple Choice

Wilma has a $25,000 certificate of deposit (CD) at the local bank. The interest on this certificate, $1,000, was credited to her account this year but she must pay an early withdrawal penalty if she cashes in the CD before next year. Which of the following is a true statement?

• A) Wilma must include the $1,000 of interest in her income this year.
• B) Wilma must include the $1,000 of interest in her income when she cashes the CD.
• C) Wilma must include the $1,000 of interest in her income this year only if the bank waives the early withdrawal penalty.
• D) Wilma must include the $1,000 of interest in her income next year if she does not pay the early withdrawal penalty.
• E) All of the above

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Definitions:

Psychological Tension

A mental or emotional strain resulting from conflicting, demanding, or challenging situations.

Creditworthiness

A valuation of the likelihood that a borrower can fulfill their financial obligations.

Economic Significance

Refers to the impact of a phenomenon, action, or policy on the economy's performance, often measured through its effects on growth, employment, and productivity.

Repeated Experience

An occurrence or event that happens multiple times, allowing individuals or organizations to gain insight or familiarity through its repetition.