Problem
December is approaching, and Mr. Thrift is anticipating a year end bonus of $10,000. Mr. Thrift and his wife , Penny, agree to invest the money rather than spend it. Mr. Thrift is so eager that he begins day trading in November, losing almost the whole month's paycheck. Alarmed, Penny packs up his computer and sends it to her cousin, Wally, in the Australian Outback. When his bonus arrives, Mr. Thrift has to find other ways to put his money to work.
Penny immediately sends Mr. Thrift to the bank with his bonus check. There he places all $10,000 in a savings account, promising himself not to settle for an interest rate of 2.9% for any longer than necessary. The bank's financial advisor suggests that Mr. Thrift consider certificates of deposit or possibly mutual funds, and penny suggests that he buy more life insurance period Wally, in his thank you letter for the computer, asks if he can borrow $1000 to invest in a drive-in theater his buddy wants to build. Mr. Thrift listens to the suggestions, but still wants to talk to a stockbroker.
i. What financial intermediaries does Mr. Thrift use or consider using?
ii. Where would Mr. Thrift go to talk to a stockbroker?
iii. How does speculation enter the picture?
iv. If Mr. Thrift waits a year, how much will he have to invest?