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Author: MisterFungi Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35383  
Subject: CDs vs Bonds Date: 6/8/2007 10:17 AM
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This is probably covered somewhere (please point me there, if so):

If I can get 0.3% to 0.5% higher yields on CDs than I can on Treasuries or AAA corporate bonds (or even AA bonds), and the CDs are FDIC insured, then why might I want to consider the alternatives?

I'm guessing that for the Treasuries the answer has something to do with tax consequences (my wife and I are in 28% bracket) and (perhaps) liquidity. But for your basic guy who is looking for yield at low/moderate risk and is happy to hold 1-2 years to maturity, am I correct in concluding that the bond market is offering little or no (or even negative!) premium for risk?

And if that conclusion is accurate, what's the explanation for that?

(As you will surmise, I'm pretty new to this stuff.)

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