Question

How are certificates of deposit similar to U.S. bonds? They are not similar because U.S. bonds cannot be sold to citizens, only states. They are not similar because certificates of deposit are backed by gold. They are one of the riskiest forms of investment They give a guaranteed rate of return

Answer 1

Answer:

The correct answer is letter "D": They give a guaranteed rate of return.

Explanation:

Certificates of Deposit (CD) are investment vehicles that individuals can purchase with the condition of not withdrawing the money pooled after an agreed period so they can obtain the returns of the investment with a higher interest rate.

U.S. bonds, Treasury Bonds or T-bonds are investment vehicles issued by the U.S. government that offers repayment to the principal plus interest after maturity which tends to be from 10 to 30 years.

Both CD and T-bonds offer a rate of return after a specific period agreed with the investment issuer. That return is guaranteed compared to other riskier investments like stocks.