Final answer:
A negotiable certificate of deposit is a financial asset that is distinct for its ability to be traded in a secondary market for added liquidity. While FDIC insures CDs, it is up to a certain limit, and they are not secured by specific assets but are obligations of the issuing bank.
Step-by-step explanation:
A negotiable certificate of deposit (CD) is a type of financial asset that is characterized by its ability to be traded in a secondary market. Unlike small CDs, which are typically non-transferable and fall into the primary market category, negotiable CDs can be bought and sold after their initial purchase. This feature provides liquidity to the holder, making it an appealing option for investors who may need to access their invested funds before the CD matures.
However, when it comes to insurance under the FDIC, not all aspects of CDs are covered beyond certain limits. The FDIC insures CDs up to the applicable limit, and it's important for investors to check the details of their CD investments with respect to FDIC coverage. As for being backed by specific assets, CDs are general obligations of the issuing bank, and while they can be considered secure, they are not typically 'secured' by specific assets in the way that secured loans are.
Therefore, the characteristic that defines a negotiable certificate of deposit from the options provided is that it can be traded in a secondary market.