finance question

[pico]

this might be the wrong forum to ask this, but i think there might be couple of smart people who knows the answer.

how come the 9month CD rate (last time i checked, i saw 5.25 APR) is higher than US treasury bonds? CDs are covered under FDIC, so both of them are riskless investments.

[Ganchrow]

how come the 9month CD rate (last time i checked, i saw 5.25 APR) is higher than US treasury bonds? CDs are covered under FDIC, so both of them are riskless investments.

Comparing prevailing CD Rates to Treasury Bill and Note rates, the number seem quite similar.

Remember that CDs are typically purchased by individuals (only beimng insured up to $100,00) while Treasuries are typically institutional instruments. The market for CDs is competitive and many banks (especially smaller ones) will frequently try to make their product more attractive by offering higher rates.

[pico]

thanks, you even post up links...you're pretty good.

so you can say CDs are poor man's Bond.

[PitBoss]

With CDs you might face stiff penalties for extricating your money before maturity.

[pico]

With CDs you might face stiff penalties for extricating your money before maturity.

same with the bond. you're taking a hit on the bid and ask on the secondary market