Q. With reference to the Certificate of Deposit (CD), a money market instrument, consider the following statements:
1.It is a security issued by a Bank to depositors of funds and is similar to Fixed Deposits (FDs).
2.CDs are issued at a discount to their face value and are negotiable and tradable in the money market.
3.The minimum value for a Certificate of Deposit must be a multiple of Rs. 1 Lakh subject to a minimum of Rs. 25 Lakhs.
Which of the statements given above are correct?
Answer: D
Notes:
Explanation:
Statement 1: Correct. A Certificate of Deposit is a security/bond issued by a bank to depositors.
Statement 2: Correct. CDs are issued at a discount and are negotiable and tradable in the money market, unlike regular FDs.
Statement 3: Correct. CDs are issued in multiples of Rs. 1 Lakh, subject to a minimum value of Rs.25 Lakhs.
