Question

savings options and investment risks quick check
which of the following is a certificate of deposit (cd)? (1 point)
○ an investment in stocks.
○ an account paying 0.5% interest with no other limitations.
○ a deposit that has to be maintained in the bank for 1 year in exchange of a 2% interest.
○ a \basket\ of money pooled in by many investors to acquire securities based on the value of cash.

Explanation:

A certificate of deposit (CD) is a time - deposit. It requires the depositor to keep the money in the bank for a fixed period (in this case, 1 year) in exchange for a fixed interest rate (2% here). Stocks are equity investments. An account with 0.5% interest and no limitations is more like a regular savings account. A “basket” of money pooled by investors is more related to mutual - fund - like concepts.

Answer:

A deposit that has to be maintained in the bank for 1 year in exchange of a 2% interest.