DEFINITION of 'Jumbo CD'

A certificate of deposit (CD) with a minimum denomination of $100,000. Jumbo CDs have higher denominations than regular certificate of deposits, and allow investors to deposit a certain amount of money and receive interest. These investments are considered low-risk, stable investments for large investors. They typically pay interest at a higher rate than lower denomination CDs.

BREAKING DOWN 'Jumbo CD'

Jumbo CDs are typically bought and sold by large institutional investors, such as banks and pension funds, because of the high minimum denomination. Investors are mainly compensated for not having access to their money over the contract period. The longer the time period and the higher the denomination, the higher the interest rate will be.

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