Which statements apply to a certificate of deposit (CD)?

A certificate of deposit (CD) is an interest-bearing deposit account held at a financial institution that typically offers a higher interest rate compared to regular savings accounts, in exchange for the investor agreeing to leave their money deposited for a specified period of time.

The correct statement notes that a CD can be purchased from banking institutions, which is true because these financial products are primarily offered by banks and credit unions as a way for customers to secure a fixed interest return on their deposits. When investors deposit money into a CD, they are effectively lending that money to the bank for a set term, during which the bank agrees to pay interest at a predetermined rate.

In contrast, other options present characteristics that are not universally applicable to all CDs. For instance, while it is possible for some CDs to have high minimum deposit limits, many institutions offer CDs with much lower minimum amounts, making the first statement inaccurate. Similarly, CDs typically offer fixed interest rates rather than variable rates, which conflicts with the statement regarding variable interest rates. Lastly, while it is true that CDs generally have penalties for early withdrawal, there are also some types of CDs, such as no-penalty CDs, that allow for cashing out before maturity without incurring fees, thereby making the statement about