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When I look at the fixed income overview page for etrade (although they are all pretty much the same as far as I can tell) there is a 5.75% rate for CDs at one year. When you click through, this is for CUSIP 46656MQS3 which is an 11 month CD callable after 6 months, not issued until 10/11 which would be the settlement date, with interest at maturity. So it looks like it would pay 52.93 (per thousand) interest for the time between 10/11/2023 and 9/11/2024 if not called early, which computes out to 5.763% IRR between those dates. If I bought it now, the money would leave my account today but not start earning interest in the CD until 10/11, so the real IRR would be 5.559% by my calculation which is a small but meaningful difference, and that is if it is not called early. If it is called early, then it is even worse because the interest-free period is a larger part of the total period.

Are my understanding and calculation here correct? And out of curiosity where does the money go between execution and settlement? Does it sit with etrade or with the issuing bank of the CD (JPM, here)?

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    Your money earns interest until the trade settles. You'll earn 5+ percent at a broker that automatically sweeps from your money market account to your brokerage account (Fidelity) and about 1/2 a pct at Schwab where the cash sits in your brokerage account until trade execution.
    – Bob Baerker
    Commented Sep 30, 2023 at 16:12

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The money stays in your brokerage account for the ~10 days. During that time the order is "accepted" not "executed". Time between execution and settlement is at most two days.

Until settlement, which is when the money actually transfers, you should be earning whatever your settlement fund is paying. At Vanguard, that would typically be VMFXX paying around 5.2% right now. At Schwab it's only 0.45%. At Morgan Stanley (E-Trade isn't independent anymore) you could be getting 5.1% if you have the correct sweep account selected.

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