What is a certificate of deposit (CD)?

A certificate of deposit, or CD, is indeed best described as a savings account that offers a fixed interest rate and has a predetermined maturity date. When individuals deposit money into a CD, they agree to leave their funds untouched for a specific period, which can range from a few months to several years. In return for this commitment, the bank typically provides a higher interest rate compared to regular savings accounts, making it an attractive option for those looking to save money with some degree of return.

The other options don't accurately depict what a CD is. For example, a short-term bond investment refers to debt securities issued by corporations or governments, which do not have the same fixed interest and maturity characteristics as a CD. An investment in real estate involves purchasing property, which is a different asset class with its own risks and benefits. Lastly, a variable interest loan typically refers to loans where the interest rate can change over time, differing from the fixed interest rate structure of a certificate of deposit. Thus, option B encapsulates the essence of what a CD represents in personal finance.