What financial product represents a loan to the bank with interest returned after a set period?

The financial product that best fits the description of representing a loan to the bank, with interest returned after a set period, is a certificate of deposit (CD). A CD is a time deposit offered by banks, where the investor agrees to deposit a specific sum of money for a fixed term, which can range from a few months to several years. In return for locking in their funds for the agreed period, the bank pays a higher interest rate compared to regular savings accounts.

The nature of a CD is that it essentially functions as a loan to the bank; the bank can use the deposited funds for lending or investment purposes during the term of the CD. When the term matures, the bank returns the principal amount along with the accumulated interest to the account holder. This makes CDs a popular choice for individuals looking to earn a higher return on their savings while accepting limited liquidity for a designated period.

Other financial products listed do not fit this description as well as a certificate of deposit does. For instance, a high-yield savings account allows for easier access to funds without the commitment of a fixed term, while a money market fund typically invests in short-term debt securities rather than requiring a set loan period. A retirement annuity generally involves regular contributions over time to