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1.
If you buy a $1,000 CD for only $600, what type of CD is it?
Choose wisely. There is only one correct answer.
Discount CD. To be discounted is to be sold for less than face value.
2.
If you withdraw your money from a certificate of deposit before the maturity date, you will typically be penalized three to six months interest/dividends.
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True. On the average, the penalty is three to six months worth of earnings.
3.
The length of time for which a certificate of deposit stays in the financial institution contributes to the size of its interest or dividend rate.
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True. Length of time is one factor among many that determine interest or dividend rates.
4.
Financial institutions are allowed to compound certificate rates as they wish.
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True. They may compound rates daily, weekly, or monthly.
5.
To be quoted on the NASDAQ, a negotiable certificate of deposit must have a maturity of at least _______.
Choose wisely. There is only one correct answer.
14 days. This is the minimum maturity.