Certificate of Deposit (CD) refers to a certificate issued by a bank to a person depositing money done for a specific length of time at a particular rate of interest.
Importance of Certificate of Deposit (CD)
Certificate of Deposit makes savings grow. On investing in a CD reward is for keeping the cash in the account for the length of the CD term.
Formula
A(t) = A(0) (1 + r / n) ^ nt
Where:-
A(t) = Amount function
A(0) = Principal amount (Initial Investment)
t = Total time in years
n = Number of compounding periods per year
r = Nominal annual interest rate
⌊nt⌋ means that nt is rounded down to the nearest integer.