Which of the following statements correctly describes a Certificate of Deposit (CD)?

• A. Deposit as little as $500; penalty for early withdrawal; term from 3 months to 5 years.
• B. No penalties for early withdrawal.
• C. Minimum deposit $100 and no limit on term.
• D. Always variable interest rates monthly.

Answer: (A)

CDs are time deposits that lock money in for a set term and pay a fixed rate for that period, with a penalty if you withdraw early. The statement that mentions a minimum opening deposit around $500, a penalty for early withdrawal, and a term range from 3 months to 5 years matches how CDs typically work. The other options don’t fit: CDs usually have penalties for early withdrawal, and minimum deposits are often higher than $100 with defined term ranges rather than no limit on term. While some CDs can have variable rates, they are not described as "always variable monthly" for standard CDs.