Question

Note: Please I need clear handwriting because English is not my mother language

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The following project is open note, open internet and you may work with friends. 1) (10) Assuming you go to Starbucks once a week for $10 or $40 a month. Instead of your Starbucks purchase you decide to invest that money for the next 20 years. Investigate using the internet to explore different types of investment vehicles. Write the website or company and the interest you are will be receiving upon investing your money. a) Simple Interest (Municipal Bonds)

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Answer 1

Municipal Bonds

Municipal bonds are debt securities issued by states,counties and other governmental entities to fund day-to-day obligations and to finance capital projects such as building schools, highways etc...

On investing in municipal bonds, there will be a promise of regular interest payments, usually semi-annually, and the return of the original investment, or “principal.” A municipal bond’s maturity date may be in the future usually longer period. Short-term bonds mature in one to three years, while long-term bonds only mature for more than 10years.

Savings accounts

It is a one of the type of bank accounts which is usually offered by every bank which provide almost all basic facilities for an Individual. It allows a customer to so transaction with accounts and with limitation with number of transactions.

Simple interest is the interest on a loan or investment is calculated only on the amount initially invested or loaned. It is direct way of calculating interest without any complication.

Certificate of deposit

A  CD, is a type of federally insured savings account that has a fixed interest rate and fixed date of withdrawal, known as the maturity date.

Discretely compounded interest is calculated and added to the principal at specific intervals (either annually, monthly, or weekly).

Continous Interest/ Money Market

Continuously compounded interest means that the principal is constantly earning interest and the interest on the interest will be earned

The advantage of continuous compounding is that the interest is reinvested into the account over an infinite number of periods. It means that investors enjoy the continuous growth, compared to when they earn interest monthly, quarterly, or annually with regular compounding.

Annuity

It is the payment of fixed sum for a continuous long period in return for a one time heavy investment.

Usually it is opted by individuals who wish to earn a fixed income in future until death will pan to make in annuity investments.

It is good an option who have huge funds and invest at a single shot.