SIE Exam Question 938: Answer and Explanation

Question: 938

____ Certificate of deposit

• A. Intended to be held until maturity, but can be redeemed prior to maturity for a penalty.
• B. Dividends are declared in local currencies and paid in U.S. dollars.
• C. Can be redeemed at any time without penalty; objective is to earn interest for shareholders.
• D. Unsecured promissory note issued by corporations with a fixed maturity of up to 270 days.

Correct Answer: E

Explanation:

A certificate of deposit is intended to be held until maturity, but can be redeemed prior to maturity for a penalty.