Which of the following is a characteristic of a negotiable certificate of deposit?

A negotiable certificate of deposit (CD) is a specific type of time deposit that has several distinctive features, one of which is that it can be traded in a secondary market. This allows investors to buy and sell these CDs before their maturity date, providing liquidity that traditional CDs do not offer. This characteristic makes negotiable CDs attractive for investors looking for flexibility and the ability to react to changing interest rates or cash needs.

In contrast, other characteristics of negotiable CDs include that they are typically issued for larger amounts than regular CDs and that they may not be fully insured by the FDIC once they are sold in the secondary market. Additionally, purchasing negotiable CDs typically occurs through a broker rather than directly from the issuing bank, and they are not secured by specific assets but rather represent a claim on the issuing bank’s overall assets. Understanding these features helps clarify why the ability to trade in a secondary market is a key trait.