A certificate of deposit (CD)is issued when Lo-Risk Invest LLC deposits funds with Money Bank on the bank's promise to repay the funds, with interest, on a certain date. Lo-Risk cannot withdraw the funds before the date of maturity because
A)the bank is both the issuer of the instrument and the drawee.
B)a CD is a time deposit.
C)a CD cannot be sold or negotiated to a third party before maturity.
D)a CD is not a three-party instrument.

Question

Quizplus · Accepted Answer

A Certificate of Deposit (CD) is considered a time deposit, meaning the funds deposited cannot be withdrawn before a specified maturity date without incurring penalties. This characteristic defines the nature of CDs and differentiates them from demand deposits, where funds can be withdrawn at any time.

A Certificate of Deposit (CD)is Issued When Lo-Risk Invest LLC