Assignment 4: Saving and Investing Essay Example
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)Answer: Like 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)Answer: 6 months because I might loose my job. It will make me go into my financial reserve. Another thing that could make me go into financial reserve is having to pay medical bills .Somebody getting sick in the family. 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)Answer: I will prefer compound interest. Over time the compound interest will build up more interest in the account. After awhile it the interest generates its own interest. 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why? (3-6 sentences. 2.0 points)Answer: 5. Which strategy for saving do you think would work best for you? Why? (3-6 sentences. 2.0 points)Answer: 6. Describe two financial goals that you would want to meet before you begin investing. Explain why you would want to reach those goals first. (2-4 sentences. 2.0 points) 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) 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. 9. Describe two examples of debt
(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)Answer: Like 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)Answer: 6 months because I might loose my job. It will make me go into my financial reserve. Another thing that could make me go into financial reserve is having to pay medical bills .Somebody getting sick in the family. 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)Answer: I will prefer compound interest. Over time the compound interest will build up more interest in the account. After awhile it the interest generates its own interest. 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why? (3-6 sentences. 2.0 points)Answer: 5. Which strategy for saving do you think would work best for you? Why? (3-6 sentences. 2.0 points)Answer: 6. Describe two financial goals that you would want to meet before you begin investing. Explain why you would want to reach those goals first. (2-4 sentences. 2.0 points) 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) 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. 9. Describe two examples of debt