Essay on Assignment 4: Saving and Investing

919 Words May 16th, 2013 4 Pages
Assignment 4: Saving and Investing
(32.0 points) 1. Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial reserve. (3-6 sentences. 2.0 points): having to get a car. Another situation could be house repairs. 2. How many months' worth of expenses do you think your financial reserve should include? Describe at least two reasons for this decision. (3-6 sentences. 2.0 points): 6 months because I could lose my job. It will make me go into my financial reserve. I may also have to pay medical bills because someone got sick or injured. 3. Would you rather have a savings account that offered simple interest, or an account that offered compound interest? Why?
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(2-4 sentences. 2.0 points) Interest yield and current value.

8. Calculate the return on investment in dollars and as a percentage for an investment that you purchase for $500 and sell for $600. (2.0 points) 20 % ($100 profit) 9. Describe two examples of debt investments. (1-2 sentences. 1.0 points): US Treasuries (Government debt - what the government sells to pay for its) and corporate bonds (debt issues by companies to pay for usually new things the company wants to) 10. Describe two examples of equity investments. (1-2 sentences. 1.0 points) A stock or any other security representing an ownership interest. On a company's balance sheet, the amount of the funds contributed by the owners. Also referred to as "shareholders' equity".

11. If you were a new investor who wanted to invest in stock, would you prefer to invest in registered public stock, or unregistered private stock? Why? (2-4 sentences. 1.0 points) Registered public stock. Most people do, and I can be more confident if I invest in that. 12. Describe an alternative investment that you might invest in someday, and explain why this investment is appealing to you. (2-4 sentences. 2.0 points) Peer-to-peer lending. It's a high return investment but also high risk. There are ways to invest in Peer-to-peer to minimize risk. It's a great alternative investment option. 13. Describe at least three other investments you want to make with your income either now or someday

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