CDs, Eurodollars & Eurobonds — Q&A

The bank accepts a deposit (principal) for a fixed term, pays a fixed rate of interest during the term, and returns principal at maturity — similar to a bond’s par, coupon, and maturity structure.

A large negotiable CD trading in the secondary market with a $100,000 minimum; $1 million denominations are common. Banks often pay higher rates due to the larger minimum.

Only $250,000 is fully covered; amounts above $250,000 receive only partial FDIC coverage. Full coverage applies to CDs of $250,000 or less per bank.

An investor can spread deposits across multiple banks through one broker-dealer — e.g., four $250,000 CDs from four banks = $1 million fully insured, as long as no single bank exceeds $250,000.

Eurodollar deposits. No — the name is misleading; any U.S. Dollar held outside the United States qualifies, regardless of country.

A bond paying interest and principal in a currency different from the country where it is issued. Example: a Japanese company issues a yen-paying bond in Canada — Canadian investors face exchange rate risk when converting yen proceeds back to Canadian dollars.

When converting into a strong currency or converting out of a weak currency. If the yen weakens versus the Canadian dollar, Canadian investors receive fewer CAD when converting.

A bond issued outside the U.S. that pays interest and principal in U.S. Dollars. ⚠️ The U.S. federal government does NOT issue Eurodollar bonds — Treasuries are sold only at U.S. Treasury auctions.

Foreign issuers face risk converting home currency to dollars for payments; foreign investors face risk converting dollar proceeds back to home currency. U.S. issuers (corporations, municipalities) face no currency risk because payments are in dollars.

No. The SEC has jurisdiction over securities offered in the United States; securities issued outside the U.S. are generally not subject to SEC registration — an incentive for U.S. corporations issuing Eurodollar bonds abroad.