What is fixed deposit - Definition and Meaning

Fixed Deposit :

Fixed Deposit is one in which the customer deposits a big sum of money for a fixed period of time. It is a financial tool given by banks which allows investors with a larger rate of interest than an ordinary savings account, until the provided maturity date.

Formula :

A = P x (1 + r/n)nt Where, A = Maturity Value P = Principal Amount r = Rate of Interest t = Number of Period n = Compounded Interest Frequency

Example :

P = Rs. 15000 r = 5% = 0.05 n = 2 years t = 4 (quarterly) A = 15000 x (1 + 0.05/4)4x2 A = Rs. 16567.29

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