Final answer:
U.S. savings bonds interest is taxed when cashed or at maturity, while CDs and Treasury Bonds offer differing rates of return and liquidity with taxation on an annual basis.
Step-by-step explanation:
The question pertains to the taxation of interest earned on U.S. savings bonds and how it compares with the interest rates of other financial instruments such as Certificates of Deposit (CDs). While U.S. savings bonds' interest is taxed at sale or maturity, CDs offer annual interest payments, with rates that have varied since 1984. Financial investors usually seek a higher interest rate for CDs compared to savings accounts as compensation for the reduced liquidity due to the commitment to leave deposits untouched for a fixed period.
Moreover, it's important to note that U.S. federal Treasury Bonds are highly regarded as safe investments, and their bond yield is what measures the expected rate of return over time. This yield can differ from the interest rate stated on the bond at the time of purchase, especially for bonds that are not brand new.