ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A Certificate of Deposit is an agreement with the bank to deposit a certain amount for a fixed period of time. The bank then pays the interest on the amount. The deposited amount will be locked in. This is a freely negotiable investment.

Detailed explanation-2: -The tenor of a CD at issuance shall not be less than seven days and shall not exceed one year. CDs shall be issued on a T+1 basis where T represents the date of closure of the offer period for issuance of the CDs.

Detailed explanation-3: -A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest.

Detailed explanation-4: -By depositing your money into a CD for a set term, you won’t lose any of your initial deposit and will lock in your interest rate until your money matures.

Detailed explanation-5: -Difference between FD and CD: The duration of CD is shorter than FD. The maximum tenure of a CD is 12 months. FD offers a wider range of tenures from a span of 7 days to 10 years of investment tenures. A minimum of Rs 1 lakh is required to invest in CDs.