Which of the following statements is true of commercial certificates of deposit?Multiple ChoiceThey may be traded prior to maturity.They are available in minimum amounts of $1,000.They are issued by the U. S. government.They are long-term securities.
Question
Which of the following statements is true of commercial certificates of deposit?Multiple ChoiceThey may be traded prior to maturity.They are available in minimum amounts of $1,000.They are issued by the U. S. government.They are long-term securities.
Solution
The correct statement about commercial certificates of deposit is: "They may be traded prior to maturity."
Here's why:
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Commercial certificates of deposit (CDs) are short-term debt instruments issued by financial institutions. They can indeed be traded prior to maturity, although this may result in penalties depending on the terms of the CD.
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Commercial CDs are typically available in larger minimum amounts, often 1,000.
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Commercial CDs are not issued by the U.S. government. They are issued by banks and other financial institutions.
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Commercial CDs are not long-term securities. They typically have maturities ranging from a few weeks to about one year, although some can have longer terms.
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