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What is Investment Options for Inherited Money about?
This document summarizes options for investing $10,000 to maximize return. Option 1 is an interest-bearing checking account earning 2%. Option 2 is a corporate bond with 5% stated return but 10% chance of bankruptcy. Option 3 is an 8% loan to a friend with 7% chance of default. Option 4 holds the money in cash earning 0%. If risk-neutral, Option 1 has the highest expected return of $10,200, making it the best choice. Money performs the unit-of-account function when calculating relative prices and the store-
- Author
- mariamzoreik
- Language
- EN