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Small-denomination time deposits refer to certificates of deposit with a denomination of less than

A) $1,000.
B) $10,000.
C) $100,000.
D) $1,000,000.

User Wmil
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1 Answer

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Final answer:

Small-denomination time deposits are certificates of deposit with an amount less than $100,000. They are designed for individual investors and are covered by FDIC insurance up to $250,000. CDs offer a higher interest rate for a fixed term, with penalties for early withdrawal.

Step-by-step explanation:

Small-denomination time deposits are typically certificates of deposit (CDs) that are issued in amounts less than a specified value. According to the Federal Deposit Insurance Corporation (FDIC) classifications, small-denomination time deposits are those with values less than $100,000. These are also the types of CDs that most individual investors would manage, as they align with the FDIC insurance limit which protects depositors up to $250,000 per depositor, per insured bank, for each account ownership category. This means that if a bank were to fail, the FDIC would cover the amount in the CD up to this limit.

A CD is an agreement between a depositor and a bank where the depositor agrees to leave a lump sum of money invested for a fixed period of time, ranging from a few months to several years, in exchange for a higher interest rate compared to regular savings accounts. There is also often a penalty for early withdrawal from these CDs, which discourages depositors from taking out their investment before the maturity date.

User Patrick Bassut
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