With interest rates falling, which is a better investment: a four-month cd @ 5.26% or a six-month cd @ 4.9%?

Obviously, this involves guesswork, but I'm wondering whether rates will be so low after four months that the six-month is a better option. Or not.

personally i'd do the 6 month and not out think myself.

odds are that rates will be lower 6 months from now when you reinvest... but they will also be lower 4 months from now... so either choice will reinvest at a lower rate.
the question is will you be better off reinvesting in 4 mo's or 6 mo's? no one knows for sure...
but dont stress over it...here's how to look at it.:

buy the 6 month... on 100k you will earn $2450
buy the 4 month.. you'd earn 1753.33 .. then reinvest for 2 months at current rate of (who knows??) 4%? and you'd have total interest of $2,420 at the end of 6 months... less if rates are lower.. more if higher...

so dont stress about it... as you see above on 100k invested even if you;re wrong it only costs you $30 in foregone earnings.

worry more about what bank you;re doing this through... is it a no-named internet bank that;ll be out of business in 2 months and leave you filling out paperwork with the FDIC so you can get your money back months after you were supposed to.....

worry more about your liquidity needs.. what are the chances you;ll have to get your hands on the money sooner than expected>?..... those 2 issues are the ones that'll really screw your APY

Cheers

5.26% is the better deal. How do you know what will happen in 6 months? Things could change and rates could go up.

go for the six month.

Mathematically it's close to being a wash. I calculate that, after the four month cd matures, you would have to find a bank willing to sell you a two month cd at 4.11%. That would give you the exact same return as just buying the six month cd immediately. With interest rates expected to drop, I can easily see short term rates being either slightly over or slightly under 4.11% four months from now.

My gut instinct is to buy the four month cd at 5.26% on the theory that a bird in hand is worth two in the bush. But I must admit that both deals look reasonable.