A certificate of deposit differs from a promissory note in that:
A)the maker is always a bank.
B)there are three parties to the transaction.
C)the payee of a CD must be paid on demand.
D)Both (a) and (b).

Question

Quizplus · Accepted Answer

A certificate of deposit (CD) is a financial product offered by banks, and the maker of the CD is always a bank. On the other hand, a promissory note is a legal document in which the borrower promises to repay a loan to the lender. Therefore, the maker of a promissory note can be an individual or a company, not necessarily a bank. Option B is incorrect because a CD transaction involves only two parties: the bank (maker) that issues the CD and the holder (payee) of the CD who invests the money. Option C is also incorrect because a CD holder (payee) cannot demand payment until the maturity date.

A Certificate of Deposit Differs from a Promissory Note in That