4% - 9 year - stepped callable CD

[jetpack]

Hi All,

I'm looking to add to my CD ladder, and trying to get the best rates.
I saw this Brokered Callable Stepped CD for 99 cents on the dollar.
coupon rates:
09/20/2012 2.25
09/20/2017 2.50
09/20/2022 3.00
09/20/2024 5.00
09/20/2025 8.50

The yield to maturity is 4% The yield to call is 12% and worst yield is 2.736%

Edit: 10 year cd. 2027 maturity... I'm usually very good at math! haha

I can't quite get a good picture of what the predicted rates are for various call times, I guess it goes down then up over the years. Is there a tool where I can plug in these numbers?

Anyway, also wanted your thoughts on this type of CD. It seems like it's pretty good both short and long term... but it all depends on when and if it's called.

 

[CaliKid]

I can't believe it's that much in 2024/2025. That's great but just a surprise to me.

You might post on bogelheads.

 

[brewer12345]

5 year brokered CDs are at much less than 3%, so it will be called.

 

[jetpack]

Well, great, if it's called early, it's like a 12% CD. I suspect it will be called, the question is when.

 

[CaliKid]

Well, great, if it's called early, it's like a 12% CD. I suspect it will be called, the question is when.

Huh? How do you figure 12%?

 

[jetpack]

Well, if it's at next call time. Since I'm only paying 99 cents, they give back full face value.

 

[CaliKid]

Well, if it's at next call time. Since I'm only paying 99 cents, they give back full face value.

I don't see the 12% if it's called but I am not a math expert or a financial analyst. Whatever it is it seems like a good deal to me. Good luck with it!