1 / 12

Comparing Investment Options: CDs, Stocks, and Bonds

Analyzing the advantages and disadvantages of investing in Certificates of Deposit (CDs), Stocks, and Bonds to determine the most lucrative investment vehicle.

rlee
Download Presentation

Comparing Investment Options: CDs, Stocks, and Bonds

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. EGR 403 - Project #2Group 1Dr. Rosenkrantz November 28, 2005 Investment Options Alex Camerino (Researcher) Juan Cervantes (Technical support) Kevin Curley (Operations Management) Eric Tseng (Summarizer)

  2. Overview Comparing three different investment alternatives: • CDs • Stocks • Bonds Determine the most lucrative investment vehicle from the three

  3. Scenario #1Certificates of Deposit (CDs) • A time deposit held in a bank with a fixed interest rate • Limited risk (FDIC insured) • Straightforward process • Relatively low rates • Illiquid

  4. Scenario #2Corporate Securities (Stocks) • A stock is a certificate of ownership in a corporation • Liquid • High potential for return • High maintenance • Higher risk • Unpredictable (Volatile) • Tax consequences

  5. Scenario #3Corporate Debt Certificates (Bonds ) • A certificate of debt issued to raise funds (Government or Private) • Predictable return • Decent interest rates • Most have fixed interest payments • Certain tax advantages • Affected by market (before maturity) • Potential high risk

  6. Analysis Criteria • Ten/twenty year time period • 2% Inflation, 3.78% MARR • $5000 Initial Investment • Analysis of a potential emergency at year four CDs • Washington Mutual • 10 year, 4% CD • Penalty of 2 years interest if withdrawn early

  7. Analysis Criteria (cont.) Stocks • American Century Blend • Future Worth based on historic rates • $12 Broker Commission Fee Bonds • General Motors • 10 year, 8.2% Bond • Bought at face value

  8. Graph of Annual Performance

  9. Future Worth Comparison Results

  10. What if an Unplanned Event Occurs? Health problem, Auto Accident, Law Problem

  11. Conclusion • Bonds and Stocks are more liquid (can be sold at market value), and are better in case of unforeseen circumstances • So which is really the best investment? Well, it depends…

  12. References • www.scottrade.com • finance.yahoo.com • www.fmsbonds.com • www.bigcharts.com

More Related