A placement of funds for a certain period of time with a bank for which the depositor of the funds receives a confirmation which makes the deposit receipt a negotiable instrument . Investment bankers create a secondary market where CD’s can be purchased and sold prior to maturity.
Investors usually accept a smaller interest rate on CD’s than on regular time deposits because investment is more liquid , that is, the CD can be converted into cash at any time without asking the bank to break the deposit. CDs were originally invented in the United States in the early sixties and were used in the domestic U.S money market.
They were later also used for external dollar in several financial centers. The technique is so attractive that the instrument has also been introduced into the domestic money market of several other countries .
Investors usually accept a smaller interest rate on CD’s than on regular time deposits because investment is more liquid , that is, the CD can be converted into cash at any time without asking the bank to break the deposit. CDs were originally invented in the United States in the early sixties and were used in the domestic U.S money market.
They were later also used for external dollar in several financial centers. The technique is so attractive that the instrument has also been introduced into the domestic money market of several other countries .
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