Series 7 practice questioneasyMoney Market — Negotiable CDs
Negotiable certificates of deposit (CDs) differ from regular bank CDs in that negotiable CDs:
- AAre FDIC-insured for any amount
- BCan be bought and sold in the secondary market✓ Correct answer
- CHave no fixed maturity date
- DPay variable interest rates that adjust daily
Explanation
Why B — Can be bought and sold in the secondary market
Negotiable CDs (also called jumbo CDs) are large-denomination ($100,000 minimum, typically $1 million or more) time deposits issued by commercial banks that can be traded in the secondary money market. Unlike regular bank CDs, which incur an early withdrawal penalty, negotiable CDs can be sold to other investors before maturity. They are a key money market instrument used primarily by institutional investors.
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