BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Short term
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Long term
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Negotiable money market
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Unsecured money market
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Detailed explanation-1: -CD also allows the passing of its ownership from one party (transferor) to another (transferee) by endorsement and delivery. By this definition, Certificate of deposit is also a negotiable instrument. Banks / FIs cannot grant loans against CDs. Furthermore, they cannot buy-back their own CDs before maturity.
Detailed explanation-2: -Negotiable CDs, introduced in the early 1960s, can be sold before maturity in the secondary money market. However, only short-term CDs-less than 3 months-have an appreciable market.
Detailed explanation-3: -A Certificate of Deposit (CD) is a money market instrument which is issued in a dematerialised form against funds deposited in a bank for a specific period. The Reserve Bank of India (RBI) issues guidelines for Certificate of Deposit from time to time.
Detailed explanation-4: -Certificate of Deposit or CD is a fixed-income financial instrument governed under the Reserve Bank and India (RBI) issued in a dematerialized form. The amount at payout is assured from the beginning. A CD can be issued by any All-India Financial Institution or Scheduled Commercial Bank.