What is a Certificate of Deposit (CD)?

Certificate of Deposit. Short- or medium-term, interest-bearing, FDIC-insured debt instrument offere…

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CD
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tod-term-icon.jpg TERM OF THE DAY

CD

Certificate of Deposit. Short- or medium-term, interest-bearing, FDIC-insured debt instrument offered by banks and savings and loans. CDs offer higher rates of return than most comparable investments, in exchange for tying up invested money for the duration of the certificate’s maturity. Money removed before maturity is subject to a penalty. CDs are low risk, low return investments, and are also known as "time deposits", because the account holder has agreed to keep the money in the account for a specified amount of time, anywhere from three months to six years.

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Usage Example
I chose to invest money in an certificate of deposit because I did not want to be tempted to withdraw funds at any given moment and it bears a maturity date of four years.
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List of Important Financial Ratios for Stock Analysis

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