What is Certificate of Deposit?
Certificate of Deposit A time deposit issued by a bank with a fixed maturity date and specified interest rate; early withdrawal typically incurs a penalty. Used for capital preservation and interest income.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Certificate of Deposit” Used in Practice?
Investors purchase certificates of deposit for fixed-term interest earnings, but early withdrawal may trigger a penalty as per banking regulations.
Certification Exam Relevance
Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Certificate of Deposit?
A time deposit issued by a bank with a fixed maturity date and specified interest rate; early withdrawal typically incurs a penalty. Used for capital preservation and interest income.
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