Math 126

Mathematics in our world is a very interesting concept being that math is used in our everyday lives, even when we don’t think we are using math we use it so much that it is done subconsciously. In chapter nine we talk about the advantages and disadvantages of different types of ways to invest 1000 dollars. I will discuss the differences of each one and write in detail which one I would invest in and why.
In these times of recession, one wants to hold on to one’s savings and invest in sound options. One such option is the Certificate of Deposits (CDs) – these are time based deposits, quite similar to a bond. Issued by a commercial bank or obtainable through a brokerage, these allow an investor to invest for a fixed interest rate for a fixed time. A CD will have maturity date, a specified fixed interest and can be of any denomination. The term of deposit can vary from one month to five years. While investing, it is always good to know the pros and cons of the investment option. Advantages are:
    • CDs typically offer a higher rate of interest than Treasury bills and savings account due to the higher risk associated with them.
    • As the rate of interest is fixed, your return on investment is ensured despite the rate fluctuations in the market.
    • CDs are insured by Federal Deposit Insurance Corporation and hence are a good investment option for single income households and retired folks. CDs are a risk-free investment.
    • . CDs can be purchased and sold through a brokerage firm. This way you can encash the CD before the maturity term without paying the penalty.
  Disadvantages are: Money is tied down for long durations of time. Though the investor can withdraw money, he has to generally incur penalty in terms of some amount of loss of interest on the deposit amount. You can get a waiver on the penalty in case of special circumstances like disability, death or retirement.
    • As the rate of interest is fixed, it is difficult to change or to take...