A debt instrument sold by a bank to its depositors that pays annual interest of a given amount and at maturity pays back the original purchase price is called
A)commercial paper.
B)a certificate of deposit.
C)a municipal bond.
D)federal funds.

Question

Quizplus · Accepted Answer

The description matches a certificate of deposit (CD), which is a common type of debt instrument sold by banks to their depositors. CDs typically pay a fixed annual interest rate and have a specific maturity date, at which point the investor receives their initial investment back. Commercial paper refers to short-term debt issued by corporations, while municipal bonds and federal funds refer to different types of government debt.

A Debt Instrument Sold by a Bank to Its Depositors