What is the typical maturity profile for negotiable certificates of deposit?

• A. Usually 6 months, with maximum up to 5 years
• B. Typically 3 years
• C. Exactly 1 year
• D. 2 weeks

Answer: (A)

Negotiable certificates of deposit (NCDs) are short to medium-term bank borrowings that can be traded in the secondary market. Investors value them for a balance of yield and liquidity, so issuers structure them to align with common wholesale funding horizons. The typical maturity is around six months because it offers a stable funding period that remains attractive to investors who want relatively short lock-in while still providing a reasonable return. At the same time, these instruments can be extended to longer terms—up to about five years—for larger or bespoke issues, though such longer maturities are less common in normal market activity. This combination—generally six months with potential up to five years—best reflects the usual demand and liquidity characteristics in the NCD market.