UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev | Next
Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35387  
Subject: Re: Ameritrade CDs Date: 7/23/2013 7:23 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
The CDs were at 3.5 and 3.6% with 3 years until maturity. After the offer was made, I figured that holding on to the CDs would only yield an additional 2.4% (3.6% - 1.2% premium I got for selling).

Well, you don't say what the rates on 3 year CDs were at the time that you traded them in, but if they were anything close to current rates, 3 year CD rates were, at best, in the 1.4% range (according to Bankrate and FatWallet).

After paying you 102.4% of face value, Fidelity could have sold the CDs to someone at 105% of face value, and the buyer still would have netted a little over 1.9% APY (0.5% above the best currently available rates) and Fidelity would have been able to keep the extra 2.6% of the face value, plus commissions. If Fidelity was able to sell at 106% of face value, keeping 3.6% of the face value (plus commissions), the buyer still would have received about a 1.6% APY - still better than the current 1.4%.

AJ
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Macro Economics

Ringing the NASDAQ Bell
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement