No. of Recommendations: 2
Wow, you are really tying yourself in knots to justify anything but the CDs. I think you pretty clearly answered the question you asked (On a risk-adjusted basis, can I do better with the money elsewhere?), because although you do not seem to want to admit it is a resounding "No."

We are talking about a 10 year CD with principal guaranteed by the feddle gubmint, a well above market coupon, and an embedded put option (put the CD to Pen Fed at par for a 4.89% penalty). Say what you like about boring and unsexy, but given the range of alternatives you presented I do not see anything of a similar risk profile that is anywhere near as attractive. CA munis? That is a far cry from something backed by uncle sam. Equities? They certainly look attractive e, but they are not even in the same county as a CD, let alone in the same neighborhood.

If you don't want to buy a CD, knock yourself out. Personally, I recently liquidated a bunch of Agency MBS to jump into this CD because it is quite clearly a superior investment.
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