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Author Question: Suppose you deposit money in a certificate of deposit (CD) at a bank. Which of the following ... (Read 131 times)

B

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on: Jul 10, 2018
Suppose you deposit money in a certificate of deposit (CD) at a bank. Which of the following statements is TRUE?
 
  A) The bank is borrowing money from you without a promise to repay that money with interest.
  B) The bank is lending money to you with a promise to repay that money with interest.
  C) The bank is technically renting money from you with a promise to repay that money with interest.
  D) The bank is lending money to you, but not borrowing money from you.

Question 2

The phrase price to rent money is sometimes used to refer to ________.
 
  A) historical prices
  B) compound rates
  C) discount rates
  D) interest rates


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helenmarkerine

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: C
Explanation: A) When you buy a CD, the bank DOES promise to repay both the principal and interest due.
B) When you buy a CD, the bank is NOT lending money to you but borrowing money from you.
D) When you buy a CD, the bank is renting or borrowing money from you; it is NOT lending money to you.

Answer to Question 2

Answer: D


B

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Reply #2 on: Jul 10, 2018
TY


helenmarkerine

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Reply #3 on: Jul 10, 2018
Happy to Help


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