Income Beginner: Introduction to Certificates of Deposit (CDs)

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1.
If you buy a $1,000 CD for only $600, what type of CD is it?
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Discount CD. To be discounted is to be sold for less than face value.
2.
What is the denomination range for small-savings certificates of deposit?
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Less than $100,000. Small-savings CDs may not exceed $100,000.
3.
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.
4.
You can buy negotiable certificates of deposit in any amount.
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False. You can buy them only in amounts over $100,000.
5.
If you want to increase the deposit on your CD periodically, you can do so by buying _________.
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An add-on CD. With an add-on CD, you can add funds throughout the life of the CD.