Negotiable Certificates of Deposit

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Negotiable Certificates of Deposit

Negotiable certificates of deposit are issued in denominations over $100,000 and sold on the open market.

They are a type of money market instrument. The depositor of a negotiable CD is allowed to negotiate the interest or dividend rate with the financial institution.

The secondary market is where investors can sell their CDs to other investors before maturity if they need cash. These CDs must be $1 million or more in value to be traded.

Negotiable CDs have maturities ranging from 14 days to more than one year. Their rates are closely tied to the going rate of US Treasury bills. Along with other CDs, they are the only interest- or dividend-bearing money market instruments, and they are considered safe and liquid. They can be quoted on the NASDAQ, but they must have a minimum maturity of 14 days.