Question : Which of the following is a feature of a certificate of deposit?
Option 1: Low interest rate
Option 2: Flexible maturity period
Option 3: Transferable
Option 4: No penalty for premature withdrawal
Correct Answer: Transferable
Solution : The correct answer is (c). Transferable
A certificate of deposit is a fixed-term financial instrument issued by banks or financial institutions to individuals or entities. It represents a deposit that the depositor makes with the institution for a specified period at a fixed interest rate. CDs are commonly used as a low-risk investment option.
Certificates of deposit can be transferred to another party before their maturity, subject to the terms and conditions set by the issuing institution. This transferability allows investors to sell or transfer their CDs to other individuals or entities in the secondary market.
