PFI 3381: Investments Unit 2 Project

Learning Goals:

-List and describe transaction accounts including savings, money market, and CDs.

-Describe the characteristics of bonds and stocks (including types, classifications/ratings, yields/valuation, and pricing).

Your best friend is getting married this weekend and your friends want to meet up for a drink. Everyone starts chatting about their current/past college courses. They soon discover that you are in an investment course so, they start sharing their investment choices. They want to know what they are doing right or not so right.

Project Scenarios:

Brenda: She likes to invest in technology and medical supply stocks. She says that technology and medical supplies are the best stocks because they are pandemic proof. With everything that has gone on, technology stocks have seen the highest returns and will continue to see more growth in the future. She believes that by only investing in these two types of stocks, she will earn the most money.

Brannon: He likes to invest well established funds. He is invested in both stock index mutual and bond funds. He thinks that diversification is the only way to go and that it will safeguard him from large losses. He does not believe he is taking on any risk with these types of investments.

Bella: She hates market risk. She saw her parents lose a bunch of money in 2008 and then again in 2020. She wants to be safe and smart so, she puts all her savings in her safe at home. She believes that this is the safest way to save for her future. She knows that she will not lose any of this money because she can go into her safe and see it whenever she wants! This makes her feel safe and secure because she can get access to her money anytime.

Bernardo: He loves his savings account. Why? Because it is the only thing protected by the FDIC. He said this is the riskless option for his entire retirement. No market risks! Just safe money. His bank approached him about some CD options that he has started to use. However, he doesnt know if it is as safe as his savings account which has the FDIC protection.

Project Requirements: Consider what you have learned about the transaction accounts, bonds and stocks. For each of your four friends: For each of the four scenarios above, please answer the following questions:

1.Discuss the appropriateness of the investment sections. Incorporate what we discussed in Unit 1 regarding the risk and return trade off, current interest rates and inflation levels (compared to historical levels) into your answer. Please use references and correctly cite your work.

2.From what we learned in Unit 2, list at least one advantage of his/her chosen course of action.

3.From what we learned in Unit 2, list at least one disadvantage of his/her chosen course of action.

Minimum four paragraphs (3-5 sentences each), double spaced, 12 point font, and APA style. Please make sure to cite your work.