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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 78680  
Subject: Re: Corporate vs Treasury Bonds Date: 8/6/1999 12:37 AM
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x4a54 asks,

just curious --
my Mom buys a lot of CD's and complains (tho it's
been a while) about the good ones being called...
do you look for uncallable ones ? or don't consider
it an issue ?

I'm not sure that's much of a problem today. It was more of a concern in the early 80's when a 5 yr CD yielded 14% as failing banks boosted yields to attract deposits. When the bank failed, and the new owners came in, FDIC rules allowed them to cut the interest rate on the high yield CDs. This was probably what precipitated "the good ones being called." With the strong economy, few banks are failing today.

if you hold your bonds to maturity, isn't the spread
irrelevant ? in that wouldn't you just compare yield
based on Ask to alternative investments ?

I guess it's just me, but I refuse to be hosed by the market makers. (That's the nice thing about Treasury Direct. If you put in a "non-competitive" bid, you actually get a better yield than half the big Wall Street firms that participated in the auction.)

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