Income Beginner: Introduction to Certificates of Deposit (CDs)

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1.
Financial institutions are allowed to compound certificate rates as they wish.
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True. They may compound rates daily, weekly, or monthly.
2.
To be quoted on the NASDAQ, a negotiable certificate of deposit must have a maturity of at least _______.
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14 days. This is the minimum maturity.
3.
Why are negotiable CDs called negotiable?
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Investors can negotiate the interest/dividend rates. Although investors can negotiate numerous properties of these CDs, the name comes from the privilege of negotiating the interest/dividend rates.
4.
Compounding makes a yield _______ simple interest/dividends.
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Higher than. Compounding gives you additional earnings on top of the earnings youve already received.
5.
The alternative to a fixed-rate certificate of deposit (CD) is a(n) _________.
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Variable-rate CD. This rate changes periodically along with the market.