Assignment 4TAvery Essay

Submitted By tomcat8
Words: 959
Pages: 4

Assignment 4
(32 points)
Assignment 4: Saving and Investing

Save this file in your course folder, and name it with Assignment, the section number, and your first initial and last name. For example, Jessie Robinson's assignment for Section 1 would be named Assignment1JRobinson.

Type the answers to the assignment questions below. Use complete sentences unless the question says otherwise. You will have more than one day to complete an assignment. At the end of each day, be sure to save your progress.

Review Lesson 4 of the Course Overview for instructions about turning in your assignments.

Assignment Questions

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) Maybe if a business owner went bankrupt, and they lost everything. Only in this situation would I see someone dipping into their retirement fund early.
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) Fully funded emergency fund of 3-6 months of living expenses. The reason for building up this reserve. With this reserve you're building your safety net against major life events so that you never have to go into debt again.
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 a savings account just because I am familiar with them and I feel like they are very simple to use.
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) I would prefer annual compounding because it seems like you make more money that way.
5. Which strategy for saving do you think would work best for you? Why? (3-6 sentences. 2.0 points) I say taking a little bit of your paycheck every month and putting it in your savings is the best way to do it.
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) A goal would be to have all daily living expenses - and an emergency fund - before one starts to send money away - without a guarantee of getting it back.
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) Penny stocks are loosely categorized companies with share prices of below $5 and with market caps of under $200 million
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 investments. (1-2 sentences. 1.0 points) A debt investment is an investment in a firm through the purchase of a debt instrument as opposed to conventional equity investment in companies through buying common or preferred stock.
10. Describe two examples of equity investments. (1-2 sentences. 1.0 points) An example of an equity investment is a stock or any other security representing an ownership interest. Real estate is another example
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) Public