Originally Posted by
Snoopy
Let's put this question in a more Heartland relevant way. There are two investors, each investing $10,000 with Heartland on the same day.
1/ Investor A puts their money in a Heartland term deposit for 5 years. Interest is compounded annually.
2/ Investor B puts their money in a one year Heartland term deposit. Upon maturity, investor B reinvests their term deposit plus interest earned for another year. Investor B does this for five years in total.
Over the five years the credit rating of Heartland does not change and the interest rate curve remains flat (i.e. the one year interest rate is the same as the five year interest rate). The actual interest rate earned from Heartland does not change over the five year period.
Now hopefully Axe, you will agree with me that at the end of the five years both Investor A and Investor B will have excatly the same amount of money in their Heartland account. But which investor, A or B, has taken the greatest risk over the five year investment period?
SNOOPY