A Financial Parable
There once was a small town where nearly the entire population was afflicted with headaches. Some were a mere annoyance, others were raging migraines. Needless to say, these headaches, and how to relieve them, were the topic of much conversation in this city. But life goes on, and people need a place to save their money and a place to borrow money, and one day a new bank opened up in town. Other banks offered many different programs for saving and checking, but this bank had just one program: a certificate of deposit with a 20-year term. Normally a bank with a single program with such a long term would never attract customers, but this CD was special -- it promised an annual 100% rate of interest, compounded annually. Other banks had certificates of deposit, but the best interest rate you could get was standard at all the other banks -- you could get a maximum of 5%. The city was abuzz with this amazing new program. Everyone had their calculators and the...