Too good to be true? CD rates

[jively]

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Deposit Insurance

Our United States investors frequently ask us about Federal Deposit Insurance Corporation (FDIC) insurance.

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Good catch.

If it's not FDIC insured, I wouldn't say "avoid" but I think you need to know it is not like a CD, but more like a bond. It is important to see what the credit rating of the company is. Let's say it's rated A, then there's some kind of default rate. I don't know what it is, but let's say 2% of 5-year bonds will default. Then if you buy 100 of these bonds, you'd expect 2 of them to default, so your EV is 98% of the listed yield...

-Tom