personal finance 4 Essay

1156 Words Nov 26th, 2014 5 Pages
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)
I put money into a financial reserve for college. I will not touch the money till then. I can add but not subtract from it. 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)
As many as I can have saved up into it. Depends on wether I am working, and what my income is. Cause I could lose a job. 3. Would you rather have a savings account that offered simple interest, or an account that offered compound interest? Why? (3-6 sentences. 2.0 points)
It would
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One would want to be sure that the money spent on investing is not money needed for regular daily things. 7. Describe at least two factors of an investment that you would want to consider before putting money into that specific investment. (2-4 sentences. 2.0 points)
Know the Business
Who run this Business
Previous History of Business
Financials of the Business.Profit History.Growth of the company .History of returns on investments.debt of the Busines. Risk on this business and Check you risk tolerance level 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) TIP: If you don't remember how to calculate return on investment, review the Calculating ROI pages in Section 4, Lesson 2. N/A 9. Describe two examples of debt investments. (1-2 sentences. 1.0 points)
US Treasuries (Government debt - what the government sells to pay for it's operations - one of the most secure and low-return investments in the world).
Corporate bonds (debt issues by companies to pay for usually new things the company wants to do - build a factory, expand stores, etc.) these are not as safe, and pay a rate of return based on the risk you are taking. They get basically a letter grade, and you get paid more interest the LOWER the grade. 10.

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