Selecting a CD. Casey has $1,000 to invest in a certificate of deposit. Her local bank offers her...

Question

Selecting a CD. Casey has $1,000 to invest in a certificate of deposit. Her local bank offers her 2.5% on a 12-month FDIC-insured CD. A nonfinancial institution offers her 5.2% on a 12-month CD. What is the risk premium? What else must Casey consider in choosing between the two CDs?

David · Accepted Answer

There are several other factors to consider when comparing CDs: 
-Insurance: An investor must consider whether a CD is insured by the Federal Deposit Insurance 
Corporation (FDIC). If a CD is insured by the FDIC. The federal government covers the full investment 
amount of the CD up to S250 000 per depositor if the bank fails. If a CD is not insured,

Selecting a CD. Casey has $1,000 to invest in a certificate of deposit. Her local bank offers her 2.5% on a 12-month FDIC-insured CD. A nonfinancial institution offers her 5.2% on a 12-month CD. What...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment