Question
Selecting a CD.Casey has $6,000 to invest in a certificate of deposit. Her local bank offers her 4.28% on a twelve-month FDIC-insured CD. A nonfinancial
Selecting a CD.Casey has
$6,000
to invest in a certificate of deposit. Her local bank offers her
4.28%
on a twelve-month FDIC-insured CD. A nonfinancial institution offers her
6.12%
on a 1twelve-month CD. What is the risk premium? What else must Casey consider in choosing between the two CDs?
The risk premium is __ %.
(Round to two decimal places.)
Casey must also consider:(Select the best answer below.)
A.
the government's risk tolerance.
B.
that if she only needs access to the money after a long period of time, the nonfinancial institution's CD might be too risky.
C.
the bank's risk tolerance.
D.
that if she needs access to the money in a short period of time, the nonfinancial institution's CD might be too risky.
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