Tyson Furniture has $100,000 in excess cash that it wants to invest in one or more cash equivalents. The treasurer has researched two money market accounts and two certificates of deposit (CDs) offered by four major banks. The following is the information she gathered.

All of these accounts are FDIC insured for up to $250,000. Suggest how Tyson Furniture might allocate its $100,000 cash among these four opportunities. Discuss the trade-offs that management must consider.

Transcribed Image Text:

Investment Institution Omega Bank Bank of Denver Delta Bank Commerce Bank Investment Type Money market account Money market account 90-day CD 90-day CD Minimum Investment $ 100 25 2,500 2,500 Interest Rate 0.10% 0.06 0.05 0.10 Penalty for Early Withdrawal? No No Yes Yes Financial Risk Very low Very low Very low Very low