Lei's investment manager told her that if she wants to increase the return on the money currently in her checking account, she should invest in a bank certificate of deposit. This is
A) a short-term (one-year) IOU issued by the bank.
B) a long-term IOU issued by governments and corporations.
C) a unit of ownership in a corporation.
D) a short-term obligation of the U.S. Treasury with a maturity period of one year or less.
E) a bond issued by a state or local government or agency.

Question

Quizplus · Accepted Answer

A bank certificate of deposit (CD) is essentially a short-term IOU from a bank. When you purchase a CD, you are lending money to the bank for a fixed period of time, and in return, the bank agrees to pay you interest. CDs typically have terms ranging from a few months to several years, but one-year terms are common.

Lei's Investment Manager Told Her That If She Wants to Increase