Final answer:
Negotiable Certificates of Deposit (NCD) are also known as Jumbo CDs, which are time deposits with large balance requirements that can be traded in secondary markets without substantial early withdrawal penalties.
Step-by-step explanation:
Negotiable Certificates of Deposit (NCD) are known as Jumbo CDs. These are essentially time deposits with higher balance requirements and are typically used by institutional investors due to the larger sums of money involved. Unlike regular CDs, NCDs can be sold in secondary markets before they mature without a substantial penalty for early withdrawal, which makes them a more flexible investment compared to traditional Certificates of Deposit which offer higher interest rates but come with restrictions on early access to funds.
NCDs, as a part of the M2 Money Supply, are considered a financial asset or a claim on the property and the income of the borrower. They can come with different maturity dates, starting from a few months to several years, depending on the terms agreed upon between the issuer and the investor. The interest rate for an NCD is often higher in exchange for the commitment of funds over a specified period.