Willy deposits $5,000 with Home State Bank on July 1, 2012. Home State Bank promises to repay Willy the $5,000 plus 3 percent annual interest on July 1, 2017. This is
A) a certificate of deposit.
B) a cashier's check.
C) none of the choices.
D) a draft.

Question

Quizplus · Accepted Answer

This is a certificate of deposit (CD), which is a time deposit with a fixed interest rate and maturity date. The depositor agrees to leave the money in the CD until the maturity date, at which point they can withdraw the funds plus any accrued interest.

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