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Exam Code: FCBA Practice exam 2022 by Killexams.com team
FCBA BCS Foundation Certificate in Business Analysis

Exam ID : FCBA
Exam Title : BCS Foundation Certificate in Business(R) Analysis (ISEB)
Questions : 40
Passing Marks : 26 (65%)
Duration : 60 min.
Exam Type : Multiple Choice

The format for the examination is a one hour multiple-choice examination consisting of 40 questions. The examination is closed book (no materials can be taken into the examination room). The pass mark is 26/40 (65%).

Take your first step on your business analysis career path by attaining a certification that employers around the world respect and value
Understand how to identify and evaluate options for improving your business
Develop skills and knowledge to support successful business change programmes within your organisation
Attain one of the four modules you need to gain the International Diploma in Business Analysis

- What is Business Analysis (2.5%)
- The Competencies of a Business Analyst (2.5%)
- Strategy Analysis (7.5%)
- The Business Analysis Process Model (5%)
- Investigation techniques (15%)
- Stakeholder Analysis and Management (10%)
- Modelling Business Processes (10%)
- Defining the solution (5%)
- Making a Business and Financial Case (10%)
- Establishing the Requirements (7.5%)
- Documenting and Managing Requirements (7.5%)
- Modelling Requirements (7.5%)
- Delivering the Requirements (5%)
- Delivering the Business Solution (5%)

Candidates should be able to demonstrate knowledge and understanding of business analysis principles and techniques. Key areas are:
 the role and competencies of a business analyst
 strategy analysis
 business system and business process modelling
 stakeholder analysis
 investigation and modelling techniques
 requirements engineering
 business case development
This certification provides a foundation for the range of specialist BCS modular certificates in the areas of Business Analysis, IS Consultancy and Business Change. The certification can also be used as the knowledge-based specialist module for the Diploma in Business Analysis. In addition, the certification provides foundation-level Business Analysis knowledge for specialists in other disciplines, particularly Project Managers and System Developers.
The syllabus is based on the BCS publication Business Analysis, 3rd edition, and it is recommended that this text is studied by those preparing to take this examination. The headings listed in the syllabus relate to the relevant chapter headings, section headings and text included in this publication.

Syllabus
1. What is Business Analysis (2.5%)
1.1 The origins of business analysis
1.2 The development of business analysis
 The impact of outsourcing
 Competitive advantage of using IT
 Successful business change
 The importance of the business analyst
 Business analysts as internal consultants
1.3 The scope of business analysis work
 The range of analysis activities
 Strategic analysis and definition
 IT systems analysis
 Business analysis
1.4 Taking a holistic approach
1.5 The role and responsibilities of a business analyst
 Definition of the business analyst role
 Further aspects of the business analyst role 2. The Competencies of a Business Analyst (2.5%)
2.1 Personal qualities
2.2 Business knowledge
2.3 Professional techniques
2.4 The development of competencies
3. Strategy Analysis (7.5%)
3.1 The context for strategy
3.2 The definition of strategy (Johnson, Scholes and Whittington 2008)
3.3 Strategy development
3.4 External environment analysis
 PESTLE analysis
 Porters five forces model
3.5 Internal environment analysis
 MOST analysis
 Resource Audit
 Boston Box
3.6 SWOT analysis
3.7 Executing strategy
 The McKinsey 7-S model
 The Balanced Business Scorecard
 Critical Success Factors and Key Performance Indicators
4. The Business Analysis Process Model (5%)
4.1 An approach to problem-solving
4.2 Stages of the business analysis process model
 Investigate the situation
 Consider the perspectives
 Analyse the needs
 Evaluate the options
 Define the requirements
4.3 Objectives of the process model stages
4.4 Procedure for each process model stage
4.5 Techniques used within each process model stage
5. Investigation techniques (15%)
5.1 Interviews
 Advantages and disadvantages of interviewing
 Preparing for interviewing
 Conducting the interview
 Following up the interview
5.2 Observation
 Advantages and disadvantages of observation
 Formal observation
 Protocol analysis
 Shadowing
 Ethnographic studies
5.3 Workshops
 Advantages and disadvantages of workshops
 Preparing for the workshop
 Facilitating the workshop
 Techniques
 Following the workshop
5.4 Scenarios
 Advantages and disadvantages of scenarios
 Process for developing scenarios
 Documenting scenarios
5.5 Prototyping
 Advantages and disadvantages of prototyping
5.6 Quantitative approaches
 Surveys or Questionnaires
 Special Purpose Records
 Activity Sampling
 Document Analysis
5.7 Documenting the current situation
 Rich Pictures
 Mind Maps
6. Stakeholder Analysis and Management (10%)
6.1 Stakeholder categories and identification
 Customers
 Partners
 Suppliers
 Competitors
 Regulators
 Owners
 Employees
 Managers
6.2 Analysing stakeholders
 The Power/Interest Grid
6.3 Stakeholder management strategies
 No or low interest and no or low power (or influence)
 Some or high interest but no or low power (or influence)
 No or low to high interest but some power (or influence)
 No or low interest but high power (or influence)
 Some interest and high power (or influence)
 High interest and high power (or influence)
6.4 Managing stakeholders
 Stakeholder plan/assessment
6.5 Understanding stakeholder perspectives
 Soft Systems Methodology
 Analysing the perspectives
 CATWOE
6.6 Business activity models
 Creating a business activity model
 Types of activities – Plan, Enable, Do, Monitor, Control
 Developing a consensus model
7. Modelling Business Processes (10%)
7.1 Organisational context
 Functional view of an organisation
7.2 An alternative view of an organisation
7.3 The organisational view of business processes
7.4 Value propositions
7.5 Process models
 Business events
 Developing the business process model
7.6 Analysing the as-is process model
7.7 Improving business processes (to-be business process)
 Business rules
 Simplify the process
 Remove bottlenecks
 Change the sequence of tasks
 Redefine process boundary
 Automate the processing
 Redesign the process
8. Defining the solution (5%)
8.1 Gap analysis
 Identifying areas of concern
 Framework for gap analysis (elements of POPIT model)
 Formulating options
8.2 Introduction to Business Architecture
8.3 Definition of Business Architecture
8.4 Business Architecture techniques
 Definition of a capability model
 Definition of a value stream
9. Making a Business and Financial Case (10%)
9.1 The business case in the project lifecycle
9.2 Identifying options
9.3 Assessing project feasibility
 Business feasibility
 Technical feasibility
 Financial feasibility
9.4 Structure of a business case
 Contents of a business case
 Categories of costs and benefits
 Impact assessment
 Risk assessment
9.5 Investment appraisal
 Payback
 Discounted cash flow and Internal rate of return
10. Establishing the Requirements (7.5%)
10.1 A framework for requirements engineering
10.2 Actors in requirements engineering
 The business representatives
 The project team
10.3 Requirements elicitation
 Tacit and explicit knowledge
 Requirements elicitation techniques
10.4 Requirements analysis
 Requirements filters
 SMART requirements
10.5 Requirements validation
11. Documenting and Managing Requirements (7.5%)
11.1 The requirements document
 Structure
 Content of the requirements document
11.2 The requirements catalogue
 Types of requirements; general, technical, functional and non-functional
 Hierarchy of requirements
 Documenting a requirement
11.3 Managing requirements
 Elements of requirements management 12. Modelling Requirements (7.5%)
12.1 Modelling system functions
 Use case diagrams
12.2 Modelling system data
 Entity Relationship Diagrams
o Entities, attributes and relationships
o Types of relationships
 Class Models
o Objects and classes
o Attributes
o Associations
13. Delivering the Requirements (5%)
13.1 Delivering the solution
13.2 Context
13.3 Lifecycles
 The waterfall lifecycle
 The ‘V model lifecycle
 Incremental lifecycle
 Iterative systems development lifecycle
14. Delivering the Business Solution (5%)
14.1 BA role in the business change lifecycle
14.2 Design stage
 Information and Technology
o Design
o Development
o Testing
14.3 Implementation stage
 SARAH model
14.4 Realisation stage
 Contents of the benefits plan

BCS Foundation Certificate in Business Analysis
ISEB Certificate information
Killexams : ISEB Certificate information - BingNews https://killexams.com/pass4sure/exam-detail/FCBA Search results Killexams : ISEB Certificate information - BingNews https://killexams.com/pass4sure/exam-detail/FCBA https://killexams.com/exam_list/ISEB Killexams : Graduate Certificate in Information Systems Development

Who is the Information Systems Development Certificate program for?

Companies of all sizes depend on information systems to manage their operations, production, communications, records, distribution, sales and customer interactions. Information systems often need to be developed and/or customized for the specific needs of the company or industry and with business goals in mind.

Drexel’s Post-Baccalaureate/Graduate Certificate in Information Systems Development is an interdisciplinary certificate program jointly offered by Drexel's LeBow College of Business and College of Computing & Informatics (CCI) that provides broad knowledge on analyzing, designing and deploying information systems.

This certificate is part of a suite of five Business Information Technology certificates that can be applied toward Drexel’s Master of Science in Business Information Technology (MSBIT), also offered through LeBow and CCI. Three certificates must be completed to receive the MS degree, including our required foundational Certificate in Information Technology & Management.

Fast Facts

Number of Courses

5 (15 quarter credits)

Combines with other certificates to create master’s degree

MS Business Information Technology

Time-to-completion

1 year

Format

On campus or online

Time Commitment

Full-time or part-time

Aid eligible

No

Tech experience required?

Yes – Bachelor’s degree in a technical discipline or in business

GRE/GMAT required?

No

Information Systems Development Curriculum

IMPORTANT NOTE: Drexel operates on the quarter, not semester, system, offering classes during four 10-week terms throughout the year. 

The courses in this certificate provide you with both technical and business skills and knowledge, and they cover business agility, database management, and the latest approaches to development of information systems and application software. 

The curriculum includes five required courses:

  • INFO 540: Perspectives on Information Systems
  • INFO 650: Database Management Systems 
  • CT 630: Application Software Construction and Operation
  • MIS 624: System Analysis & Design
  • MIS 652: Business Agility and IT

Please visit Drexel’s Course Catalog for a full description of each required course for this program. You can also find a demo Plan of Study for the certificate.

Information Systems Development Admissions Requirements

  • A completed application for the online format or on-campus format.
  • A four-year bachelor's degree from a regionally accredited institution in the United States or an equivalent international institution.
  • A GPA of 3.0 or higher, in a completed degree program, bachelor’s degree or above.
  • Official final transcripts from ALL Colleges/Universities attended. Please note: For students who have attended an institution outside of the US, it is highly recommended to submit a NACES approved course-by-course transcript evaluation (i.e., WES) for expedited review of your application. This approved evaluation will take the place of the transcript requirement to complete your application.
  • Graduate Management Admission Test (GMAT) and/or the Graduate Record Examination (GRE) Scores are not required.
  • One letter of recommendation required, two suggested
  • Essay/Statement of Purpose
  • Current Resume.
  • Students must have access to a computer that meets or exceeds CCI’s computer requirements
  • Additional requirements for International Students.

Please visit our Graduate Admissions section for application deadlines.

Customize Your Education with Our Business Information Technology Certificates

CCI and LeBow also offer a suite of graduate certificates to allow students to customize their education. In addition to the Information Systems Development Certificate, we offer the following modular, stackable certificates in Business Information Technology:

Note: Students in the MSBIT will be required to complete the Information Technology & Management certificate in addition to two other certificates listed above.

Additional Information

For more information, please contact Matt Lechtenberg, College of Computing & Informatics’ director of recruitment, at cciinfo@drexel.edu or Stavrula Katsirmas, LeBow College of Business’ associate director of integrated student experience and retention, at sk697@drexel.edu

Thu, 27 May 2021 23:26:00 -0500 en text/html https://drexel.edu/cci/academics/certificate-programs/graduate-certificate-information-systems-development/
Killexams : Certificate of Deposit (CDs)

A jumbo certificate of deposit is a CD that has a larger minimum deposit, which is $100,000, compared to regular CDs. Traditional certificates of deposit typically have a minimum deposit of $2,500. As with traditional certificates of deposit, interest earned is paid at maturity along with return of the principal.

Sat, 21 Jul 2018 04:37:00 -0500 en text/html https://www.investopedia.com/certificate-of-deposits-4689733
Killexams : Graduate Certificate in Information Technology Management

Who is the Information Technology & Management Certificate program for?

With technology driving almost every industry, and more and more professionals in the coming years will be needed to lead at the intersection of business, information technology and management. Drexel’s Post-Baccalaureate/Graduate Certificate in Information Technology & Management provides fundamental knowledge of the business applications, management and administration of information technology.

An interdisciplinary post-baccalaureate certificate program jointly offered by Drexel’s LeBow College of Business and the College of Computing & Informatics (CCI), the Information Technology & Management certificate is designed to provide students with the knowledge and skills to manage information technology successfully in an organizational environment.

This certificate is part of a suite of five Business Information Technology certificates that can be applied toward Drexel’s Master of Science in Business Information Technology (MSBIT), also offered through LeBow and CCI. Three certificates must be completed to receive the MS degree, including the required, foundational Certificate in Information Technology & Management.

Fast Facts

Number of Courses

5 (15 quarter credits)

Combines with other certificates to create Master’s degree

MS Business Information Technology

Time-to-completion

1 year

Format

On campus or online

Time Commitment

Full-time or part-time

Aid eligible

No

Tech experience required?

Yes – Bachelor’s degree in a technical discipline or in business

GRE/GMAT required?

No

Information Technology & Management Curriculum

IMPORTANT NOTE: Drexel operates on the quarter, not semester, system, offering classes during four 10-week terms throughout the year. 

In this certificate program, you willgain expertise in the contemporary digital environment, cloud technology, alignment of operations, risk assessment, and continuity planning. 

The curriculum is comprised of five required courses:

  • CT 500 Introduction to the Digital Environment
  • CT 600 Cloud Technology
  • CT 610 Disaster Recovery, Continuity Planning and Digital Risk Assessment
  • MIS 614 Aligning IT and Operations
  • MIS 625 Management of IT Operations

Please visit Drexel’s Course Catalog for a full description of each required course for this program. You can also find a demo Plan of Study for the certificate.

Information Technology & Management Admissions Requirements

  • A completed application for the online format or on-campus format.
  • A four-year bachelor's degree from a regionally accredited institution in the United States or an equivalent international institution.
  • A GPA of 3.0 or higher, in a completed degree program, bachelor’s degree or above.
  • Official final transcripts from ALL Colleges/Universities attended. Please note: For students who have attended an institution outside of the US, it is highly recommended to submit a NACES approved course-by-course transcript evaluation (i.e., WES) for expedited review of your application. This approved evaluation will take the place of the transcript requirement to complete your application.
  • Graduate Management Admission Test (GMAT) and/or the Graduate Record Examination (GRE) Scores are not required.
  • One letter of recommendation required, two suggested
  • Essay/Statement of Purpose
  • Current Resume.
  • Students must have access to a computer that meets or exceeds CCI’s computer requirements
  • Additional requirements for International Students.

Please visit our Graduate Admissions section for application deadlines.

Customize Your Education with Our Business Information Technology Certificates

CCI and LeBow also offer a suite of graduate certificates to allow students to customize their education. In addition to the Information Technology and Management Certificate, we offer modular, stackable certificates in Business Information Technology in:

Note: Students in the MSBIT will be required to complete the Information Technology & Management certificate in addition to two other certificates listed above.

Additional Information

For more information, please contact Matt Lechtenberg, College of Computing & Informatics’ director of recruitment, at cciinfo@drexel.edu or Stavrula Katsirmas, LeBow College of Business’ associate director of integrated student experience and retention, at sk697@drexel.edu

Thu, 27 May 2021 23:26:00 -0500 en text/html https://drexel.edu/cci/academics/certificate-programs/graduate-certificate-information-technology-management/
Killexams : Are Certificates of Deposit Safe?

Certificates of deposit are one of the safest places to tie up your cash, but they're not without their limitations. CDs are federally insured, so you don't have to worry about your bank going bankrupt. The value of your cash won't fluctuate like it would in the stock market, and you'll get higher interest rates than a general savings account. But CDs are not inflation-proof and there are penalties if you need to unexpectedly withdraw your cash, so you'll need to plan accordingly.

How does a CD work?

A CD is a type of savings account that pays a fixed interest rate for a fixed term. When you open a CD, the bank agrees to leave your money on deposit for a predetermined period of time, such as one year. From there, the bank pays a fixed interest rate and guarantees a rate of return that's generally higher than a regular savings account. But there's a catch -- you can't withdraw any of your money until the CD reaches maturity without facing a penalty. 

Are CDs safe?

Like saving accounts or money market accounts, CDs are offered at most brick-and-mortar banks, online banks, and credit unions or brokerages. CDs are just as safe as any other deposit account, as long as the bank is federally insured and takes basic steps to protect your information, such as encryption and multifactor authentication. 

The Federal Deposit Insurance Corporation and National Credit Union Administration protect CD funds at banks and credit unions, respectively. As long as you make sure to purchase your CD through an FDIC-insured bank or NCUA-insured credit union, you'll be in good hands. CDs are federally insured up to $250,000 per depositor. In the case that your bank goes bankrupt, your CD savings will be secure.

How does inflation affect a CD?

Inflation is when the dollar in your pocket loses its purchasing power, and CDs are unfortunately not set up for success in an inflationary environment. If inflation is rising, the rate of return you're earning on your CD may be outpaced. Your savings will continue to grow, but it won't be able to buy as much as your cash can today. If a CD can't keep up with inflation, you may be better off putting your funds elsewhere. I bonds, for instance, track with inflation.

How does early withdrawal work for a CD?

You can withdraw funds early from most CDs, but you'll almost always have to pay a penalty. Your exact penalty will depend on the terms and length of your CD, and it cuts into the interest you have already earned, sometimes entirely counteracting it. However, there is an exception: a no-penalty (liquid) CD. With this type of CD, you receive greater liquidity than traditional CDs, making it feel more like a savings account. But keep in mind that flexibility comes at a cost, and liquid CDs typically pay a lower interest rate to allow penalty-free access to your funds.  

The bottom line

CDs are one of the safest ways to store your cash, which should supply you some peace of mind when you're deciding what's best for your finances. And as long as your CD is opened at an FDIC-insured bank or NCUA-backed credit union, your money is federally protected. If you need more liquidity, it may make more sense to open a savings account, which offers lower interest rates but won't penalize you for withdrawing your money when you need it.

Thu, 17 Nov 2022 05:54:00 -0600 en text/html https://www.cnet.com/personal-finance/banking/are-certificates-of-deposit-safe/
Killexams : Information Technology Management


Wed, 19 Oct 2022 13:57:00 -0500 en-gb text/html https://www.uab.edu/business/home/programs/certificates/graduate/information-technology-management
Killexams : Let’s Encrypt issues 3 billion HTTPS certificates

Nonprofit certificate authority Let’s Encrypt hit a major milestone earlier this month: it issued its three billionth HTTPS certificate.

The Let’s Encrypt project was founded in 2013 to provide websites with free SSL and TLS certificates needed to enable HTTPS and encrypted communications. The organization, run by the Internet Security Research Group (ISRG) and backed by the Electronic Frontier Foundation, issued its first HTTPS certificate in September 2015 for none other than its own domain.

The ISRG announced this week that Let’s Encrypt issued its three billionth certificate earlier this month and is now providing TLS to more than 309 million domains, an increase of 12% compared to the year earlier.

While Let’s Encrypt took five years to issue its billionth certificate, it has reached the three billion milestone just two years later.

The ISRG also revealed in its 2022 annual report that 82% of web pages loaded by Firefox are using HTTPS globally. When Let’s Encrypt was founded, only 38% of website page loads were served over an HTTPS-encrypted connection.

This growth comes as Let’s Encrypt finds itself trusted and integrated by more significant players in the browser, operating system and cloud markets, including Apple, Google, Microsoft, Oracle and more.

So what’s next for Let’s Encrypt? The organization is aiming to make certificate renewal far easier for websites, especially if the organization is forced to revoke a certificate, such as if a website’s server is compromised. Let’s Encrypt was forced to revoke more than three million certificates because of a bug in its domain validation and issuance software in March 2020, and in January this year revoked millions of active certificates due to “irregularities” in the code.

ISRG executive director Josh Aas said its new specification for renewing certificates is “making its way through the IETF standards process so that the whole ecosystem can benefit, and we plan to deploy it in production at Let’s Encrypt shortly.”

Let’s Encrypt’s ultimate goal is to bring the web up to a 100% encryption rate. While we’re still a ways away, this latest milestone suggests it’s more in reach than ever before.

Wed, 30 Nov 2022 02:29:00 -0600 en-US text/html https://techcrunch.com/2022/11/30/lets-encrypt-https-three-billion/
Killexams : Geographic Information Science Certificate Killexams : Geographic Information Science Certificate - UNG

Location is a fundamental attribute of all features. Professionals in a wide range of disciplines are utilizing GIS to collect, manage, and analyze geographic information for a deeper understanding of our world. In many careers, applied knowledge of geospatial technology has become a presumed prerequisite.

The University of North Georgia Certificate in Geographic Information Science is an upper division program that emphasizes theory while addressing real-world problems. Course material is tied closely to the geospatial industry. Participating students will gain valuable experience through internships, service projects, and research projects.

The certificate is designed to complement students who are pursuing or who already possess an associate degree or higher. Students will be prepared for entry-level positions as GIS technicians and/or transfer into competitive four-year degree programs. Courses in the GIS certificate may be applied toward the Bachelor of Science degree in environmental spatial analysis.

Geographic Information Science Certificate Courses (UNG Catalog) Geographic Information Science Certificate Degree Planner

Establishing Connection...

Wed, 05 May 2021 21:24:00 -0500 en text/html https://ung.edu/degrees/certificate/geographic-information-science.php
Killexams : Geographic Information Sciences (GIS and Remote Sensing)

Miami University's online Graduate Certificate in Geographic Information Science provides comprehensive hands-on experience with the latest GIS and remote sensing technologies. Our geographic information science program can be completed in as few as 14 weeks and be the foundation or the next step for a career in geospatial mapping technology.

Fri, 21 May 2021 02:15:00 -0500 en text/html https://miamioh.edu/online/programs/graduate/certificate-in-geographic-information-science/index.html
Killexams : LAURA INGRAHAM: The goal with digital health certificates is 'ultimate control'

Laura Ingraham dove into how Biden declared support for the development of digital health certificates to "facilitate travel" on "The Ingraham Angle."

LAURA INGRAHAM: Now, when Joe Biden travels to meet with world leaders, it is a virtual certainty that he will agree to something that undermines US sovereignty and, of course, picks our pockets. And that is exactly what happened at the G20 late last week. Emerging from the Indonesia confab, Biden, along with the rest of the group of 20 nations, released a declaration supporting the development of digital health certificates, otherwise known as vaccine passports. Now, you may recall that the Angle warned about this eventuality back in the spring of 2020.

g (REUTERS/Denis Balibouse/File Photo)

The ultimate goal is control. But what they promise is that these digital IDs will end up facilitating international travel. And of course, it includes proof of vaccination. Translation – as long as a Democrat is president, he or she will allow the World Health Organization to dictate how we share our most private health information. And of course, creating a central database is going to be necessary they claim for the greater good, for your protection and, of course, for your overall benefit. But what if you aren't shot up with whatever they claim is necessary in any given time? Well, tough luck. Stay home because you're in a W.H.O. mandated lockdown. No travel for you. Now, the declaration also calls for the establishment of a trusted global digital health network. Doesn't that sound nifty? To prevent and respond to future pandemics. 

CLICK HERE TO GET THE FOX NEWS APP

Mon, 21 Nov 2022 16:52:00 -0600 Fox News en text/html https://www.foxnews.com/media/laura-ingraham-goal-digital-health-certificates-ultimate-control Killexams : What Is a Certificate of Deposit?

One of the most important parts of saving money is deciding where to keep your funds, which can be pretty tricky in an oversaturated market. Depending on your savings goals, you may consider opening a certificate of deposit, or CD, if you're looking for a predictable investment. With a CD, rates are locked in right off the bat, making them low-risk -- but they're not without their limitations. CDs come with withdrawal penalties and finite liquidity, so you need to consider what matters the most for you and your investment before jumping in. 

What is a certificate of deposit?

certificate of deposit is a type of savings account that pays interest on a fixed deposit for a fixed term, such as six months, one year or five years. CDs tend to have higher interest rates than a traditional savings account but don't allow easy access to your money. You'll incur a penalty if you withdraw your funds before the term ends. Keep in mind, however, the longer you leave your money untouched in a CD, the more interest you'll earn. 

How does a certificate of deposit work?

When you open a CD at a bank or credit union, the bank agrees to leave your money on deposit for a predetermined period of time, also known as a term. The term is the time you agree to keep your money in the CD, and you'll typically see terms ranging from 30 days to 10 years.

When deciding what length of CD term to choose, you should consider your plans for the money. If you're saving for a specific goal with a known timeline, you'll want to choose a CD term that matches the timeline. If you want to earn a higher interest rate on your savings and can withstand your money tied up for a while, you may want to choose a longer term.

If you open a CD with a five-year term, you're promising the bank that you'll leave your money in the account for five years. Once your CD reaches the end of its term, your CD is considered mature. At this point, you can either withdraw your money or renew the CD.

It is possible to withdraw funds early from most CDs, but you'll face a steep penalty. The exact penalty will depend on the terms and length of your CD, but early withdrawals tend to eat up any interest earned. There are exceptions with no-penalty (liquid) CDs. Flexibility comes at a cost, however, because liquid CDs typically pay lower interest rates to make room for penalty-free access to your funds. 

How do CD interest rates work?

The interest rate associated with a CD is noted as APY, or annual percentage yield. This is the total interest you'd earn on your CD deposit over the course of a year. Like savings accounts, CDs earn compound interest -- or interest on interest. With compounding interest, you're earning interest off the principal deposit and the increasing interest. 

How do certificates of deposit differ from savings accounts?

CDs are different than traditional savings accounts in several ways:

  • CDs typically pay more interest than traditional savings accounts. CDs usually offer a higher rate than savings accounts, but they also have a fixed rate of return regardless of whether interest rates rise during the term. CDs offer higher rates in exchange for limited to no access to that money.
  • CD rates are fixed; savings account rates fluctuate. CDs are a low-risk investment because they have a guaranteed rate of return. If you open a CD when interest rates are high, your interest rate will remain the same even if the interest rate on a savings account drops.
  • You can't access your money in a CD without facing a penalty. You'll face a penalty if you withdraw your funds from a CD before the term is up. You can deposit and withdraw as much money as you want with a savings account. 

Should I get a certificate of deposit?

CDs are low-risk investments that ensure a rate of return. The predictability of CDs makes it easier to calculate what you'll walk away with because the APY is typically fixed, meaning you'll earn the same rate for the entire term.

Aside from predictability, CDs are one of the safest places to store cash, as long as the bank is federally insured. Banks insured by the Federal Deposit Insurance Corporation and credit unions insured by the National Credit Union Administration protect your money if your bank goes bankrupt. You're covered up to $250,000 per depositor, FDIC-insured bank and ownership category. 

However, a CD isn't the best option for every investment. Once your funds are locked in, you can't take the money out until the term length is over without facing a penalty, making it a risky investment for an emergency fund. Your emergency funds are better off in an account with more liquidity, like a savings account or money market account.

It's also worth considering the consequences of low-risk investment. Although CDs offer a relatively stable place to stash cash, they have lower yields than you may earn by investing in the stock market. If you're looking for a higher rate of return, consider investing in something riskier, like a high-yielding money market account or savings bond. 

You also run the risk of losing purchasing power with inflation. Its possible inflation will rise above the interest rate you earn on the CD. If that happens, your money won't retain its value over time.

The bottom line

Different types of savings accounts offer different levels of risk and rates of return. CDs come in handy when you're looking for a low-risk investment, but it's essential to shop around and see what kind of CD rates and terms different banks are offering before you lock your money away.

Thu, 24 Nov 2022 00:21:00 -0600 en text/html https://www.cnet.com/personal-finance/banking/what-is-certificate-of-deposit/
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