Question

The 1st year and 3rd year periods for these accounts are the lengths of time that you must keep the money in the account. (You pay a penalty if you take the money out before the term is up.) Why might an investor choose a Certificate deposit with a shorter term rather than a longer one, even though it pays less interest?
Damon
Perhaps the investor is saving to buy something two years from now and does not want to pay an early withdrawal penalty.