If I were considering buying stocks, I'd want to make sure that it was financially stable, had good management, had a history and prospective future of growing profits.
Describe at least two factors of an investment that you would want to consider before putting money into that specific investment.
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.
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)
A situation that would cause me to use money from a financial reserve would be an emergency, such as unexpected medical costs. For example, if I got into a car wreck and was injured badly, I might have to use some of the money in my reserve to help pay the costs of my medical bills.
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)
I think my financial reserve should at least cover 5 months’ worth of expenses. I really think it should be that long because so it will give me some time to get things sorted out and figured out. I don't want to be in a rush too so 5 months seems okay to handle any emergencies I come across.
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)
I would rather have Compound Interest. Compound interest earns interest on the interest you already earned. Typically, your interest is compounded every quarter. Simple Interest does not earn interest on the earned interest.