The path should be quoted:

cdf() { cd "`osascript -e 'tell app "Finder" to POSIX path of (insertion location as alias)'`"; ls; }

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I do something similar, except I put in an extra condition in case the selection of the finder window errors. This could occur if there are no finder windows open. My cdf script is

tell application "Finder"
	try
		POSIX path of (target of window 1 as alias)
	on error
		POSIX path of (path to desktop folder as alias)
	end try
end tell

I put this in a file named cdf.scpt (or whatever you like), and added the following line to my .bash_profile file

alias cdf='cd "`osascript path/cdf.scpt`"'

where path id the UNIX path to the location of the cdf.scpt file.

-Mark

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insertion location also returns the desktop if there are no open windows.

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