certificate-deposit

Vocabulary Word

Definition

A 'certificate of deposit' (CD) is a type of time-based savings agreement with a bank. The bank pays a higher interest rate than regular savings accounts, but you must keep the money in the bank for a set time.

Examples in Different Contexts

For personal finance, a 'certificate of deposit' offers a way to save money at a higher interest rate but with limited access to funds until maturity. A financial planner might suggest, 'Investing in a certificate of deposit can be a smart move for securing short-term financial goals.'

Practice Scenarios

Academics

Scenario:

Investment portfolios can be diverse. We should look at including some low-risk assets with guaranteed returns in our discussion.

Response:

Certainly, a certificate of deposit is a great example of a low-risk asset that provides a steady return.

Business

Scenario:

We need to find risk-averse tools to generate return on our organization's idle cash reserves. What about putting some into a fixed-term investment?

Response:

I agree. Entering into a certificate of deposit with the bank can provide a decent return with minimal risk.