Suppose you deposit money in a certificate of deposit (CD) at a bank. Which of the following statements is TRUE?
A) The bank is borrowing money from you without a promise to repay that money with interest.
B) The bank is lending money to you with a promise to repay that money with interest.
C) The bank is technically renting money from you with a promise to repay that money with interest.
D) The bank is lending money to you, but not borrowing money from you.
Answer: C
Explanation: A) When you buy a CD, the bank DOES promise to repay both the principal and interest due.
B) When you buy a CD, the bank is NOT lending money to you but borrowing money from you.
D) When you buy a CD, the bank is renting or borrowing money from you; it is NOT lending money to you.
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