ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What is a CD account? A certificate of deposit (CD) account is an alternative to a traditional savings account. A CD account typically requires a higher minimum balance than savings accounts, and your funds will usually remain on deposit for a fixed period of time (the “term” of the account).

Detailed explanation-2: -A savings certificate is a federally insured savings account with a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on savings accounts and some money market accounts. Generally, there is no monthly fee to keep the certificate open.

Detailed explanation-3: -A CD, or certificate of deposit, is a type of savings account with a fixed interest rate that’s usually higher than a regular savings account. It also has a fixed term length and a fixed date of withdrawal, known as the maturity date. You lock funds in a CD for a term generally ranging from three months to five years.

Detailed explanation-4: -A CD that matures in less than one year will be reported by the bank as a current liability, and will be reported as a short-term investment by the depositor (provided the amount is not restricted by the depositor).