Question: Jason is in his mid 50s and was raised by

Jason is in his mid- 50s and was raised by parents of the Depression era. As a result, he is very risk adverse. He recently came into a very large amount of money and he wants to put it where it will be safe, but where it will earn him some return. His banker tells him that he should put the money in a five-year CD. Jason asks if there is any way he can lose his money and he is told that the federal government insures the deposit and will give him a higher return than a passbook savings account. Jason purchases a CD and goes home happy knowing that his money is safe and available whenever he needs it. Four months later, the roof on Jason’s barn collapses and he needs the money to make repairs, but finds that he can only withdraw it at a substantial penalty.
a. Comment on the ethics of the banker in not fully discussing all the risks of money market investments.
b. Is Jason correct in his thinking that he can find a totally risk- free investment?

View Solution:

Sale on SolutionInn
  • CreatedOctober 13, 2015
  • Files Included
Post your question