Asked by Johanna Turney on Jun 05, 2024
Verified
A certificate of deposit differs from a promissory note in that:
A) the maker is always a bank.
B) there are three parties to the transaction.
C) the payee of a CD must be paid on demand.
D) the maker can be a bank or an individual.
Certificate of Deposit
A savings certificate with a fixed maturity date and specified fixed interest rate that is issued by a bank and is insured by the Federal Deposit Insurance Corporation (FDIC).
Promissory Note
A written promise to pay a specified amount of money to a designated person or entity by a certain date or on demand.
Maker
The individual or entity that creates or signs a negotiable instrument, committing to pay the specified sum to the holder.
- Recognize the features and distinctions among different negotiable instruments including checks, drafts, promissory notes, and certificates of deposit.
Verified Answer
EG
Elissa GoldbergJun 08, 2024
Final Answer :
A
Explanation :
A certificate of deposit (CD) is a financial product offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time. Unlike promissory notes, which can be issued by individuals or entities as a form of debt instrument, CDs are exclusively issued by banking institutions.
Learning Objectives
- Recognize the features and distinctions among different negotiable instruments including checks, drafts, promissory notes, and certificates of deposit.