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Join Date: May 2009
Brokered secondary CD question
I bought about 20k in CDs today (a bit lower because par was under 100) that was about 20 basis points above new issue ones. The term is about a week less than 10 years and there were more units available that I did not purchase. This is my first secondary purchase which leads me to this dumb question. Am I correct in my understanding that somebody bought these a week or so ago and no longer want them? Does this happen much that people buy them and then immediately sell for a loss? Seems odd to me if my thought process is correct.
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I would not worry. E-trade usually has a lot secondary market cd's , often recent issue. I think E-trade buys the larger positions themselves , them not only charges a commission , but the spread too. Just like buying bonds from a broker. I have bought a few over the years, no problems. Watch the cost on commission on the shorter term ones. Eats up yield.
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