Why do CDs have lower rates of return than stocks?
A) CDs are much riskier investments than stocks.
B) CDs are less risky than stocks.
C) CDs are not taxed while stocks' returns are taxable.
D) CDs are not as liquid as stocks.

Question

Quizplus · Accepted Answer

CDs are typically considered to be less risky investments than stocks because they are insured by the FDIC up to a certain amount. As a result, the rates of return on CDs are generally lower than the potential returns on stocks, which carry more risk. The other options (A, C, and D) are all incorrect as they do not accurately reflect the relationship between CDs and stocks.

Why Do CDs Have Lower Rates of Return Than Stocks