I'll Trade You

(Followers please read this forward before this entry to understand a bit what is going on:
http://schooled-related.blogspot.com/2011/05/just-forward-before-i-go-on-with-my-new.html)

Hello ITA members,

Thank you for choosing me to help you for choosing me to help out with the decision of expanding the United States' trade agreement with other countries. I'm happy to tell you I have done my part of this deal and have chosen to countries to decide from to be part of the US' trade agreement, these countries are Honduras and Hungary. But first, a little background on the countries to give you an idea of what we're working with...

Honduras:

Honduras is a country in Central America, much of the country lies along the Caribbean Sea. The country is mountainous with some coastal plains and because it is fairly close to the equator, in comparison to the US, it has subtropic climate resulting in a variety of tropical fruits and vegetables the US cannot produce. 

The country's economy is still developing, with a GDP of $33.77 billion as of 2010 and a growth rate of 2.5%, and is ranked 99 on the world ranking and considered to be mostly unfree. The current unemployment rate, as of 2010, is 5.1% but 36% of the population is unemployed or underemployed, making this a big issue for the country. The goals of the country are just like any other developing country's goals, to have a more open economy and to have economic growth.

Prominent in Honduras are mining industries, agricultural-based companies and industries, textiles, wood products, and cigar industries. Most of the people in the country work within these industries or agricultural industries; as mentioned above, Honduras does have many tropical species of plants and animals to that not many other parts of the world (excluding countries within the tropics, though, each country or continent has its own unique species) can't offer.

Honduras has absolute advantage over many things the US does not produce itself such as coffee beans or other tropical agricultural products or animals (example would be certain types of fish). Honduras has comparative advantage over the US in manufacturing clothing and textiles due to the fact they can produce it just as efficiently for a cheaper price.

Hungary:

Hungary is a landlocked country in Europe with relatively flat to rolling plains and few low mountains. The country has 2 main rivers the run through the country; one of them, the Danube River, runs through Budapest. The country's land is fairly fertile, 85% of the country suitable for agricultural purposes.

Hungary's economy, like Honduras, has a moderately free market economy and is still developing with a ranking of 51 on the world ranking; the GDP being $132.3 billion as of 2010 and has a growth rate of 0.8%. The goals of the country are to lower the unemployment rate, reduce debt to 65-70% by 2014/2015, and continue economic growth.

Industries prominent in Hungary are mining, construction materials, processed foods, textiles, chemicals, parts for tvs and computers, and automobiles. Most people in the country work for one of the industries mentioned above or other industries in connection with those. Hungary produces many of the same things the US, and many other parts of the world, produce and provide to our country for less.

Hungary would have absolute and comparative advantage over products such as textiles (comparative only) and pharmaceutical chemicals.  

1. Which country do you think would increase its success more in meeting the economic goals from expanding trade with the United States? Explain.

The country that I think would increase its success more in meeting the economic goals from expanding trade with the United States would be Honduras. My reason for this being that the country has decent products and items to offer to the United States that can't be produced there. We buy bananas, coffee beans, textiles, apparel, palm oil, gold, etc from there and many of those items the US can't produce because they're special products that are grown or found more abundantly in that country or sub-tropic/tropical parts of the world. Even if the US could produce it it would not be worth it because we can buy it from other countries, such as Honduras, for cheaper. So not only are we benifitting from it by obtaining new products but when we buy from the country it helps stimulate their economy and they benefit from this just like any other country would.

1. Based on your information about comparative and absolute advantage, explain which country the United States would benefit from most and why.

Based on comparative and absolute advantage, I think the United States would benefit more from Hungary than Honduras. Despite the fact Honduras produces more unique products, to a certain extent, Hungary provides us with materials and products that are more useful and for a cheaper price, such as pharmaceutical chemicals, machinery, parts for electronics, food products, etc. So with that in mind, you can see how it's more beneficial to us.

1. Considering your discussion and data on barriers to trade and free trade zones, which country would be easier to trade with from a political point of view? Explain.

Honduras would be easier to trade with from a political point of view because Honduras is part of the WTO, trade agreements (free trade agreement actually) with them are already present and we have fairly good foreign relations with Honduras. All countries part of the WTO benefit from lowered trade barriers, peace promotion, and stimulates economic growth for those countries involved.

1. Are any of these countries experiencing high inflation? How does inflation affect exchange rates with U.S. currency and, ultimately, the cost of trade? How else may inflation impact a society and the world economy?

Both Honduras and Hungary's inflation rate is between 4-5% as of 2010 (Honduras being 4.6%

 and Hungary 4.9%) , according to the CIA's website, while the United States is at about 1.4%. So both countries are experiencing a larger inflation rate than the US but not by too much; actually if you look at Honduras' inflation rate from 2009 to 2010 it has decreased. Inflation affects exchange rates in many ways, it can affect the USD by causing its value to decrease which not only affects the US but other countries too. As for the exchange rate and how inflation affects it increases it because the USD would be now be worth less so more many would be needed to match the old worth. Now countries have to pay more because their currency is worth less.

1. Are there other issues in either country that the United States should consider before entering trade negotiations? Discuss them. Examples may be human rights concerns, war, geography, other political issues, malnutrition or disease, transportation, or climate.

Hungary is fairly stable on the topics mentioned, the only thing I can think of that might have an impact would be some recent issues Hungary's having with the EU regarding some changes to their media laws and constitution. It's not that big of an issue that would require the US to really be cautious about. Honduras, on the other hand is a third world country that has many issues to consider. Perhaps the biggest ones are the facts that much of the people living within the country are unemployed or underpaid and as a result starvation and malnutrition are a big issue and disease too since those people probably can't afford treatment either. The country's living conditions are really beginning to improve compared to a couple decades ago. Another big issue are drug wars, which many Central and South American countries are having issues with which is posing danger to people within the countries and those coming to it.

1. To finalize, which country do you think would be a better trade partner for the United States at this time? Explain.

Despite the fact Honduras would probably benefit more from this the United States isn't really gaining much from it besides products, I think Hungary is the better choice because both Hungary and the United States benefit from it. Hungary's products are more beneficial to the United States since they are things we need to produce other products; in other words, many of their products are land resources for us. Not only do we benefit from their products but since they're more important and probably in higher demand the country would make more money. On top of this, the country is much more stable than Honduras politically and economically, although the country, much like the rest of the world, is feeling the effects of the recession they're doing much better than Honduras.

Citations used for this entire project:

1. Nepszava. Accessed April 4, 2011. http://www.nepszava.hu/articles/article.php?id=410989 .Honduras News.
2. Accessed April 4, 2011. http://www.hondurasnews.com/honduras-receives-five-years-of-aid/.
3. Honduras News. Accessed April 4, 2011. http://www.hondurasnews.com/honduras-invests-in-new-coffee-plantations/.
4. The Heritage Foundation. Accessed March 20, 2011. http://www.heritage.org/index/ranking.
5. Central Intelligence Agency. Accessed March 20, 2011
6. . https://www.cia.gov/library/publications/the-world-factbook/geos/hu.html#top.
7. Kormany.hu. Accessed March 20, 2011.http://www.kormany.hu/download/6/93/20000/Hungary%27s%20Structural%20Reform.pdf.
8. Trading Economics. Accessed March 20, 2011. http://www.tradingeconomics.com/hungary/indicators/
9. Central Intelligence Agency. Accessed March 20, 2011https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
10. Nations Encyclopedia. Accessed March 20, 2011http://www.nationsencyclopedia.com/Americas/United-States-FOREIGN-TRADE.html
11. Trading Economics. Accessed March 20, 2011. http://www.tradingeconomics.com/honduras/indicators/
12. Central Intelligence Agency. Accessed March 20, 2011.https://www.cia.gov/library/publications/the-world-factbook/geos/ho.html
13. FPC. Accessed March 20, 2011. http://fpc.state.gov/documents/organization/47138.pdf.
14. CIA
15. . Central Intelligence Agency, n.d. Web. 22 Mar. 2011. <https://www.cia.gov/library/publications/the-world-factbook/geos/hu.html>
16. 16. Interntional Trade by Suit 101. N.p., n.d. Web. 22 Mar. 2011. <http://www.suite101.com/content/hungarys-top-exports-imports-a48064>.
17. 17. Productfrom. N.p., n.d. Web. 22 Mar. 2011. <http://www.productfrom.com/country/HU,0,0/0/0/1/>.
18. 18. Wikipedia. N.p., n.d. Web. 22 Mar. 2011. <http://en.wikipedia.org/wiki/Economy_of_Honduras>.
19. 19. US Department of State. N.p., n.d. Web. 22 Mar. 2011. <http://www.state.gov/r/pa/ei/bgn/1922.htm>.
20.  
21. 20. CIA. Central Intelligence Agency, n.d. Web. 22 Mar. 2011. <https://www.cia.gov/library/publications/the-world-factbook/geos/ho.html>
22. 21. Euro-Lex.Europa.eu. Accessed March 23, 2011. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1994R3286:20080305:EN:PDF.
23. Foreign Trade Exchange. Accessed March 23, 2011. http://www.foreigntradeexchange.com/countries/hungary.html.
24. Trade Compliance Center. Accessed March 23, 2011. http://tcc.export.gov/Trade_Agreements/All_Trade_Agreements/exp_005349.asp.
25. Wiki Answers. Accessed March 24, 2011. http://wiki.answers.com/Q/Advantages_and_disadvantages_of_wto.
26. WTO. Accessed March 24, 2011. http://www.wto.org/english/thewto_e/countries_e/honduras_e.htm.
27. Foreign Trade Information Center. Accessed March 25, 2011. http://www.sice.oas.org/ctyindex/USA/ftbhon2006_e.pdf.
28. Wiki Answers. Accessed March 25, 2011. http://wiki.answers.com/Q/What_are_the_Advantages_and_Disadvantages_of_the_European_Union
29. OANDA. Accessed April 5, 2011. http://www.oanda.com/currency/converter/.

Just a forward before I go on with my new blogpost...

Hi there followers,

Wow, followers, that's a word I never expected to be using on this blog but somehow there's 7 or 8 of you now so thank you. I'm not sure how many of you actually read the posts now but I appreciate the follows anyways. Well, I've reached the end of my Economics class (or just about) albeit I've dragged it on a bit so my apologies Mrs. Rosier; I did this project back in March but dragged on completing until now. This new blog post I'm going to be discussing about is another project-related post and it's based on American trade with foreign countries. The project has had a bit of a role play theme to it and intend to carry this on when presenting this to my teacher (aka the International Trade Administration since we are going to go along with this story-like feel). Basically I had to choose from 2 undeveloped/or developing countries to trade with the United States and from those 2 countries I would research the economy of both countries and in the end decide which would be best to trade with the US. Again, this is a make believe sort of thing, so these countries already do have trade agreements with the US but we're pretending they don't yet. The countries I have chose are Hungary and Honduras.

I'm not quite sure what will happen with the blog after this, it may die for some time, but we'll see. I do have other blogs you can follow though.

So without further ado, please enjoy my new blogpost and last economics assignment.

Where'd the water go? (under construction)

            Environmental issues exist in all communities, big or small, and whether your realize it or not. Some are more of a problem than others while others are easy to fix. Here in Florida, water scarcity becomes a big problem through out winter and spring due to lack of rain, and overtime that lack of rain has an effect on our local reservoirs. You may think that by being a peninsula we wouldn't have this much of an issue, especially living near the gulf but the fact is is that salt water is not used often for everyday use such as drinking. We rely on reservoirs , such as Tampa’s regional one. This means that everyone in the Tampa Bay area shares from this water reservoir and when there is a shortage it can mean big problems. 

Take a look at the flow-chart below :

            You can see how an issue in an area can have a large impact somewhere else and even in the future.

 Businesses, especially farmers, are severely affected by water shortages. Farmers rely on water to water their crops; in my area, strawberry farms are huge and they require a lot of water through the months of January to March not just for the sole purpose of watering them but sometimes it is needed to cover the berries in a thick coat of ice when it gets really cold at night. The issue also affects our government, locally, because they then have to step forth and begin helping with water management and setting laws if the issue were to continue getting worse; but it does much more damage than just that, Florida’s economy relies on agriculture quite a bit (not as much as tourism or fishing, of course) if farmers here cannot produce enough healthy crops because of a water shortage it hurts our economy; and on a national level it could possibly even alter the price of fruits, such as strawberries and oranges, altogether. Last year we had a surplus of strawberries and it began lowering the price or worth of strawberries on a state and national level; a shortage would mean that prices would go up, this is good for farmers but not very good for consumers.

          So, we have an issue but how do we fix it? Simple, we begin brainstorming practical solutions along with their externalities and prices. Possibly the easiest solution would be bringing awareness of the issue through the media so people become aware of it and start conserving water but this is not always an effective measure; the same goes for enforcing better water conservation laws due to the fact people still break laws regardless. The other options are a bit more expensive but they are improve sewage companies’ filtration systems and encourage recycled water or encourage the implantation of desalination systems. 

So here's the externalities of each issue.

• Enforcing better laws towards water conservation.

Positive: Less money from tax payers; may  promote water conservation on a higher level, such as taking back care of lakes and rivers, and cut down on water pollution.

Negative: It may not be as effective; the laws may be ignored and the problem may continue to persist and worsen; it maybe not even be helpful in the future.

• Water companies should look through their records and see which companies or households are consuming large amounts of water and warn them/fine them.

Positive: Promotes more caution towards water usage and conservation; fairly cheap solution; would help control the issue on a small level.

Negative: More money is wasted on fining people than paying workers; it only brings awareness but not a solution to the issue for now or the future.

• Improve sewage companies’ filtration systems and encourage recycled water. 

Positive: Decreases water pollution, can be used in ways to enhance protection for endangered bioms (like bogs, swamps, wetlands); less water being used from lakes, river, and aquifers.

Negative: If not taken care of properly or checked bacteria may be present in the water and make others sick; excess methane gas may contribute to air pollution and the greenhouse effect.

• Encourage the implantation (or more use) of desalination systems.

Positive: Using water from the gulf or ocean saves local lakes, rivers, and aquifers from being used up; less air pollution from using sewage treatment systems (since they give off methane gas) as a main source of recycling water.

        Negatives: Over time it may affect marine life; very expensive for everyday use and as a main source of water; may be expensive to repair if it breaks; doesn't promote water conservation.

1. How does each possible solution for your chosen issue meet or fail to meet each of your criteria? Explain.

Each solution, as stated above, has many possible positive and negative externalities. I'm looking for a solution that has a good chance of solving or controlling the issue but without too many or serious negative externalities, as well as not costing my city or state too much money. For the money part of my criteria it's a given that a desalination system would not fit because it would cost too much, not to install one because Tampa already has one, but to put it into everyday use. The same issue goes for improving sewage plants and encouraging the use of recycling or reusing water, even for everyday needs. Both are more expensive solutions but unlike the other two they would get the job done; setting laws and fining people are much cheaper and are safer but the effectiveness of them is probably much lower.

1. Based on your research, which is the best solution to turn into action? Explain why you made this choice over the other possible solutions. Refer back to the criteria and externalities.

After thinking it over a bit and doing a bit more research on my solution options, I think the best solution would be to improve sewage systems and encourage reusing water. The technology is there and is currently used by Singapore and is a success. The process works similar to our the ones normal sewage plants follow to remove waste from water; the water goes through a filtration system that removes the solid waste and bacteria but a few more steps are added on such as reverse osmosis and ultraviolet disinfection to ensure the water is purified and free of chemicals and anything else that slipped through the 2 other steps. This means that through this process cities could reuse their water over and over and not have to worry about talking water from reservoirs, lakes, or rivers unless it's an emergency. It works not only as a temporary solution but permanent too. It's not as expensive as the desalination process and more effective than the other two solutions. And the fact that the cleaning and filtration is so precise there isn't much to worry about bacteria or parasites slipping through and making people sick unless there is a problem with one of the systems. It has proven to be an effective and safe solution in Singapore and I think it would just as well here.

Sources:

EPA. Accessed April 17, 2011. http://www.epa.gov/region9/water/recycling/.

EPA. Accessed April 17, 2011. http://www.epa.gov/region07/kids/drnk_b.htm.

Yahoo. Accessed April 17, 2011. http://answers.yahoo.com/question/index?qid=20090815174118AA2jQ7o.

USGS. Accessed April 17, 2011. http://ga.water.usgs.gov/edu/wuww.html.

ADB. Accessed April 22, 2011. http://www.adb.org/Water/Actions/sin/NEWater-Sewage-Safe.asp.

My stand on capital punishment

An eye for eye; perhaps the most well-known concept of punishment known to man. The concept can be traced back to the time of the ancient Babylon with the installment of the first laws created by King Hammurabi. From then on, for centuries this idea has been used to punish those who commit crimes. Some of history’s most heinous crimes were brought to justice by the use of torture or capital punishment; quartering, stoning to death, hanging, the use of the guillotine, etc. It is anecdotal evidence, taken from observing historical events, that this has been a fitting punishment for murders and serious crimes; but looking into the 20th century this idea is beginning to be frowned upon today by many people. Does killing someone who took the life of another really “cross out” what was done? Would you trust your government to take the life of others without taking the lives of those who are innocent?

Thirty-four of the fifty states in the United States use the death penalty, Texas and Virginia having the highest number of executions since 1976. The death penalty is used on those who commit serious murders or mass amount of murders, such as serial killings. Families of victims argue that this brings them peace of mind to know that their loved one’s killer has paid the ultimate price for their actions. Others argue that, though, this may bring peace of mind, this is not the answer and it’s not humane and/or moral. The anesthetics used for lethal injection are sodium thiopental, pancuronium promide, and potassium chloride; despite the fact sodium thiopental is used to induce unconsciousness, some still believe that if not enough is given the person may be awake and may experience pain until the 30 seconds after the potassium chloride is added to stop the heart. This would make it inhumane and against the constitution because it could be said that it would go under “cruel and unusual punishment”.

Sure, the concept of “an eye for an eye” makes sense but I argue that it does have flaws. Two wrongs do not make a right; killing someone for murder does not solve the issue or bring complete closure to it. If anything, the death penalty merely provides an escape for the murderer instead of spending their life in a prison suffering for what they’ve done. Keeping someone in prison without parole does cost the state a lot and means less open space in state prisons but, at the same time, lethal injections cost the state too. Either way our taxes are being paid towards both. Aside from that, let’s not forgot the possibility of being wrongfully accused and wrongfully executed. Wrongful accusation occurs frequently, maybe not as much anymore due to advances in technology, but it still happens. People are sometimes put in prison for something they’ve never done. Have you ever wondered how many people are wrongfully executed? It is hypothesized that eight inmates in the past have been wrongfully executed, while more than fifteen people on death row have been released after being proven innocent.

The Rising Issue of Raising Minimum Wage

            Within the past century we have seen our country grow into a more industrialized society; we no longer rely as much on agriculture as our mean for economic growth because we now have industries,  businesses, corporations, as well as world-wide trading policies. Within the past few decades or so, we have seen other countries, such as China, modernize at an alarming rate. This proof of a larger-scale picture Social Darwinism has shown us that we are slowly losing our title as world power, or at least having to share it with our competition. As a result, we are beginning to see a world-wide impact on prices of many natural resources that we have used the most, the most obvious one of these being gasoline. Many Americans complain that the price of gas is ridiculous and that our government should step in and set a price on gas; I disagree with this idea.

           As briefly mentioned above, the society around the world is changing at an alarming rate, many countries are following our path of becoming modernized and industrialized. Industrialization is a good thing, not just for our country but for others as well, but it also has its downside. With more jobs being introduced in those countries, more people are needing to commute to and from work, meaning more gasoline will begin to be used up world-wide than just the U.S. and many European countries using the majority of it. Gasoline is our main source of fuel for cars, while more efficient and newer means of fuel and power for cars is being introduced the technology isn't fully there to support it yet. There are estimated 6,904,994,001 world-wide at this very moment (and this number continues to increase)and 310,000,000 people in the U.S., and it's said that 388 million gallons of gas is used daily just in the U.S. That's a large amount supply of gas being consumed, it's no wonder the price of gas is increasing because the demand is increasing and the supply decreasing (slowly over time but much faster than before due to an increase of population and modernization).  It is this increase in demand that impacts gas prices; as things are demanded more, especially natural resources, the price goes up to ensure there will not be a shortage. Aside from supply and demand, Political issues, war, and natural disasters in countries that oil is obtained from can have even more of an effect on the price.

          It should also be reminded that the U.S. is a  mixed-economy but our roots derive from a Laissez-Faire  policy, the idea that the government shouldn't mess with the economy. Our government's job is to provide us with goods and services, as well as oversee things to ensure no laws are broken, but their job is not, and should not be, to completely control us, otherwise we would be considered a Capitalistic economy. The government should not interfere with gas prices because it's not their job, it is the companies' job to set prices and change them as needed, even if we don't agree with the price. If the government were to start controlling the price, over time it could be a problem if a drastic change needs to be made; the request for the price change would need to be sent to congress and be voted on, etc. It would take too long and is not something that needs to be done. The gas business is like any other business out there, it's effected by supply and demand as well as several other factors that are beyond the government's control.




Sources:
fueleconomy.gov. Accessed March 10, 2011. http://www.fueleconomy.gov/feg/gasprices/faq.shtml.
U.S. Energy Information Administration. Accessed March 10, 2011. http://tonto.eia.doe.gov/tools/faqs/faq.cfm?id=23&t=10.
U.S. Census Bureau. Accessed March 10, 2011. http://www.census.gov/main/www/popclock.html.
oilprices.com. Accessed March 10, 2011. http://oilprice.com/Energy/Gas-Prices/What-Affects-Gas-Prices.html.

The creation of Barbie.

      Since I'm taking an economics class, I figured eventually an assignment would come along that has to do with entrepreneurs and learning about them and their ideas and success. Sure enough, the assignment came along and we were given the option to choose an entrepreneur from a list to write about and reflect on. Being a girl, and having played with Barbie dolls up until I was 10 or so, I chose to research Ruth Handler.

       Ruth Handler was born Nov. 4, 1916 in Denver, Colorado. She was the youngest of 10 children in her family; born of Jacob Mosko and Ida Rubinstein who were Polish immigrants. She attended a public school and at nineteen she moved to Hollywood, California. She worked as a secretary for Paramount Studio but eventually moved back to Denver where she attended the University of Denver and married in Elliot Handler in 1938. Not too long after that, they moved back to California and formed their own company, with a business partner, called Elzac.

          Ruth Handler is most well known as the creator of the popular toy, Barbie. The idea came to her when her daughter, Barbara, was just reaching her pre-teen years, she noticed her daughter would play with paper dolls and give them roles of a grown woman. After a trip to Europe and coming across the Bild Lilli doll she decided she would redesign and recreate the doll for young girls to play with. She gave the doll the name Barbie, after her daughter. Despite her husband’s idea that it wouldn’t sell, she showed it off at a toy fair in New York and Barbie instantly became a hit.

          After reading a bit about Ruth Handler and the creation of Barbie I learned that if you have an idea and it seems like it will be successful, it’s definitely worth your time and efforts. Such a simple idea, in this case a doll for young girls to play with that was inspired by her daughter, became so successful that even 50 years later it’s still just as popular. Her husband and his business partner (they founded Mattel) told her that it wouldn’t sell but that didn’t stop her, she still went on to create it. It just goes to show that a simple idea and determination can go a long way.

   Now, aside from learning about her and how Barbie was created, in my lesson I learned that many successful entrepreneurs follow a simple acronym called HUNT. Hunt stands for Harness, Underestimate, Network, and Take; these are the steps taken that help people succeed with their ideas. With that being said, let's apply these with Ruth Handler. 

• Harness your vision: Handler's idea was simply to create a doll that was in the image of an adult woman that young girls could play with. The doll was to be made of plastic, rather than out of paper like the paper dolls her daughter had been playing with.
• Underestimate the roadblocks: I don't believe money and resource would've been much of an issue for her, considering her husband founded the toy company Mattel, but what may have been a roadblock was her husband's discouragement and figuring out how to actually create the doll. 
• Network: Her husband was most likely her big network, being the owner of Mattel, creating and selling the doll would not have been an issue for her.
• Take the first step: The first step she took at creating Barbie was most likely the coincidence the she came across the Bild Lilli doll while in Europe. The first step to introducing it was the Toy Fair in New York that she attended, if she had not attended it, Barbie may not be as successful as she is now.

Information regarding information on the research may be found below:

Wikipedia. Accessed February 4, 2011. http://en.wikipedia.org/wiki/Ruth_Handler.

Wepman, Denis. ANB. Accessed February 4, 2011. http://www.anb.org/articles/10/10-02288.html.

Woman Inventors. Accessed February 4, 2011. http://www.women-inventors.com/Ruth-Handler.asp.

What would I do with $25,000?

       If I had $25,000 I would save most of it in investments to try an increase the value of that money over time. My investment would be putting the money into a Certificate of Deposit (Low risk), investing in a bond (moderate risk), or investing in a mutual fund (moderate risk). Since two of the three investments are moderate-risk, the plan as whole would be at moderate risk. The benefit expected vary between each of the options above; for example, a bond’s benefit would be rate of return, the person loans the company money and in return they’re given a bond, over time that money is paid back to the person hopefully in a larger amount. Investing in a mutual fund would the similar idea as a bond, in the end, you’re hoping you will profit from the money you invested in those companies. As for a CD, the money is safe in a bank and has a better chance of making money rather than a traditional savings account.


       Now, I could put all the money into one investment but that wouldn't be wise; it would be a much wiser choice to divide the $25,000 between all three investments rather one. Let’s say you were to put all your money into a CD and you want to take money out eventually, it’s not a very easy process. Also, CD’s don’t guarantee you’ll make a lot of money of them, you’re not taking very much of a risk by just putting it all on there. On the other hand, putting all your money into a mutual fund is not smart either, if the companies aren’t doing too well or go bankrupt your money goes also. It’s better to put a little in each, save some money in a CD and then invest the rest in bonds and a mutual fund and hope the companies do well. Your goal is to increase your money or hope the value of the money increases but you also need to keep in mind the risks for the investment you chose.