Exam (elaborations)
FMLY 2400- SAVING AND INVESTING EXAM STUDY SET
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FMLY 2400- SAVING AND INVESTING EXAM STUDY SET ...
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FMLY 2400- SAVING ANDINVESTING EXAM STUDY SET
what kind of questions to ask before investing - Answer -what will the money be used for
and how much will be needed?
-how will that money be obtained?
-how long will it take to obtain the money?
-how much risk am I willing to assume?
-are goals reasonable and is there a willingness to sacrifice current consumption to
invest?
-what possible economic and personal conditions could alter investment goals?
-what will happen if the goals arent reached?
-are the goals reasonable?
top 10 investing mistakes - Answer 1. destination unknown
2. being short sighted
3. buy first - learn later
4. theres nothing to it
5. too much of one or too little of everything
6. following hot stock tips
7. the I like their products philosophy
8. doing the wrong thing at the wrong time
9. taxes? what taxes?
10. risk? what risk?
before investing: do a financial checkup - Answer -living within means?
-high interest debt reduced?
-adequate insurance protection in place?
-has an emergency fund been started?
-is there access to other sources of cash for emergencies
, saving money to begin investing - Answer -pay yourself first
-participate in elective savings programs
-make extra effort to save 1 or 2 months/year
-take advantage of employer sponsored retirement programs
-take advantage for any gifts, inheritance, windfall
factors affecting choice of investments - Answer 1. safety and risk
2. form in investment return
3. investment liquidity
safety in an investment meaning - Answer -minimal risk of loss
-potential return on any investment should be directly related to the risk the investor
assumes
risk tolerance - Answer how comfortable the investor is with uncertainty
safest investments - Answer -savings accounts
-government savings bonds
-Canadian treasury bills
-guaranteed investment certificates (GICs)
-term deposits
-certain negotiable government and corporate bonds
speculative risk - Answer high risk investment made in the hope of earning a relatively
large profit in a short time
higher potential income investments - Answer -speculative stocks
-certain bonds
-commodities
-options
-precious metals or stones
-mutual funds
-real estate
-collectibles
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