Negotiable certificates of deposit (CDs) are financial instruments offered by banks to customers who deposit funds for fixed periods at fixed rates of interest. CDs are issued in denominations of $100,000 or more, with maturities ranging to several years. Yields on CDs are higher than yields on T-bills for two reasons. First, CDs are substantially less liquid than T-bills (their secondary market is very thin). Second, CDs have higher default risk because the represent unsecured debt obligations of the issuing banks. However, the spread between CD and T-bill yields varies depending upon economic conditions, supply and demand forces, and investor attitudes.