Question

computing CD interest. A certificate of deposit will often result in a penalty for withdrawing funds before the maturity date. if the penalty involves 2 months of interest, what would be the amount for early withdrawal on $20,000, six percent CD?

Answer 1

assuming the CD tenor is for 1 year, you will earn money upon withdrawal after 2 months. An early withdrawal, at any point of time, assuming USD deposits, would cost you 20,000 X .06 X 60/360 = 200. 6% is very unrealistic in this case