Gwen deposits $5,000 with Home State Bank on July 1,2012.Home State Bank promises to repay Gwen the $5,000 plus 3 percent annual interest on July 1,2017.Home State Bank has issued Gwen

Question

Gwen deposits $5,000 with Home State Bank on July 1,2012.Home State Bank promises to repay Gwen the $5,000 plus 3 percent annual interest on July 1,2017.Home State Bank has issued Gwen​

Quizplus · Accepted Answer

Home State Bank's promise to repay Gwen with interest on a specific future date indicates that Gwen has invested in a certificate of deposit (CD). CDs are a type of time deposit with a fixed term and interest rate, issued by banks, that pays a higher interest rate than a standard savings account.

Gwen Deposits $5,000 with Home State Bank on July 1,2012