Investing Basics: Chapter 2 quiz

Why invest in certificates of deposit, or CDs?

a) CDs offer higher interest rates than a regular savings account in exchange for not touching your money for a predetermined amount of time.

b) CDs offer a guaranteed, fixed-income portion to your portfolio of investments.

Both a and b

True or false? When interest rates are low, it's best to buy long-term CDs.

True.

False.

Identify the type of CD that allows you to withdraw money without incurring a penalty as long as you maintain a minimum balance.

Traditional CD.

Bump-up CD.

Liquid CD.

Zero-coupon CD.