A ____ is a type of investment in which you deposit an amount of money for a fixed amount of time at a stated interest rate.

A ____ is a type of investment in which you deposit an amount of money for a fixed amount of time at a stated interest rate.

• A. 401(k) plan
• B. dividend
• C. individual retirement account (IRA)
• D. certificate of deposit (CD)

Answer: (D)

A certificate of deposit (CD) is a financial product offered by banks and credit unions that allows individuals to deposit a specific amount of money for a predetermined period while earning a fixed interest rate. The main characteristic of a CD is that it typically requires the investor to commit their funds for a set duration, ranging from a few months to several years. During this time, the institution guarantees the interest rate agreed upon at the time of the deposit, providing a predictable return. The other options, while related to investments and savings, do not fit the specific description provided in the question. A 401(k) plan is primarily a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out, rather than a fixed-term deposit investment. Dividends represent a share of profits distributed to shareholders from their investments in a company, not a deposit with a fixed interest. An individual retirement account (IRA) is a type of investment account that provides tax advantages for retirement savings but does not specify that it is a fixed-term deposit with a guaranteed interest rate like a CD does.

A certificate of deposit (CD) is a financial product offered by banks and credit unions that allows individuals to deposit a specific amount of money for a predetermined period while earning a fixed interest rate. The main characteristic of a CD is that it typically requires the investor to commit their funds for a set duration, ranging from a few months to several years. During this time, the institution guarantees the interest rate agreed upon at the time of the deposit, providing a predictable return.

The other options, while related to investments and savings, do not fit the specific description provided in the question. A 401(k) plan is primarily a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out, rather than a fixed-term deposit investment. Dividends represent a share of profits distributed to shareholders from their investments in a company, not a deposit with a fixed interest. An individual retirement account (IRA) is a type of investment account that provides tax advantages for retirement savings but does not specify that it is a fixed-term deposit with a guaranteed interest rate like a CD does.