Lynn Thompson Has $300,000 in an IRA Which Is Currently

question 37

Essay

Lynn Thompson has $300,000 in an IRA which is currently invested in a CD. The money was rolled over from another investment in April. It is October of the same year now and the CD is matured. Lynn is about to roll it over into a mutual fund. It is almost by accident that you have discovered this fact. What is your advice?

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Definitions:

Education

The systematic process of facilitating learning, or the acquisition of knowledge, skills, values, and habits.

Risk-loving

Refers to a preference for risk when making choices under uncertainty, where a greater level of risk is associated with the potential for higher rewards.

Negative Expected Value

A statistical condition where the anticipated result of an investment is less than the initial cost.

Moral Hazard

The risk that one party to a transaction has not entered into the contract in good faith or has an incentive to take unusual risks because the costs are not borne by that party.