Sajid Patel American Airlines Assignment Investing money in todays economic times is a difficult decision faced by Americans.

The unpredictability of the stock market makes it tough for people to decide whether to invest their money in the stock market or in a bank offered CD. The positive side to investing in a stock market is the gain could be very fruitful if invested in the correct stock, however the downside of this is the stock could significantly decline causing the investor to lose a lot or all of the money invested. The positive of investing in a bank offered CD is the investor will be guaranteed a positive return if the amount which is initially invested is kept in the CD for the entire time frame initially discussed. The downside to investing in a bank offered CD is the return on such an investment usually is not high. According to the information given to us we are provided with $1,000,000 to invest in either American Airlines Inc. stock or in a bank offered CD offering a 0.6% rate of interest on the investment. We also have the option to invest a part of the money in each of the options listed above. The group decided to invest $500,000 into the bank offered CD because we are guaranteed a $750 return on the investment. We arrived at this return by first dividing the 0.6% annual rate by 4, because it is a three month CD, to reach a quarterly rate of .15%. We then multiplied this new interest rate by the $500,000 to reach this $750 profit on this investment. We also decided to invest $500,000 in the American Airlines stock because historically, winter season prices are significantly higher than summer month pricing due to an increase in travel during holidays. Over the next three months from September 18th through December 18th, we will be entering the new 2011 holiday season thus we expect a promising return. In addition, as we were analyzing the 2011 10K report for the company we realized over the past three years they have shown continuous signs of improvement. As it is stated in their Consolidate Statements of Operations (page 40 of the 10K report), they had an

operating loss of $2,054 million in 2008, an operating loss of $1,163 million in 2009, and an operating profit of $151 million in 2010. The net loss for American Airlines Corporation also decreased dramatically over the same three year period as it went from $2,351 million in 2008 to $1,474 million in 2009 to $469 million in 2010. This is a 37.30% decrease in loss from 2008-2009 and a 68.18% decrease in loss from 2009-2010 leading us to believe that there will be no loss in the coming year. If our prediction is correct this year the $25 million net deferred tax asset will give the company a tax credit thus increasing American Airlines profits. The independent auditing firm, Ernst & Young, gave an unqualified opinion to these financial statements giving us confidence in our investment decision. We believe that a 50/50 investment in both of these opportunities would be the best option for us. The bank offered CD investment serves as a safety net even though the return on it isnt significantly profitable. The risky nature of the investment shows favorable return though the volatile nature of the current market is unpredictable.