1-What are the advantages to an investor who chooses mutual fund investments over direct investments in stocks and bonds?

2-Assume that you are choosing an investment for your retired parents. What are the advantages and disadvanges of each of the following?

o a bond issued by the federal government,
o a state or local government,
o or a corporation?

• Which would you recommend for your retired parents? Justify your answer.

REWORDING THESE PARAGRAPHS IN YOUR OWN WORDS AND DO NOT USE THE SAME EXACT WORDS AS IN THE PARAGRAPHS.

Focus on Personal Finance, Ch. 4

o 1-The reading explained the financial services that are available and how to organize what's avail be to aide to your daily needs. I really enjoy the self-assessments at the begging of the reading, because it gives us a personal touch to the material. Depending what the financial goals are, it is important to understand the difference in savings accounts versus the investments that are available that can help someone get to their financial goals as soon as possible. The next part would be the actual financial services; some banks charge for ATM fees, so if you find that you are pulling money from ATM's regularly then this may be a factor for you to consider.

At the end of the day, when your financial plan is set up there are tools that need to be researched to be utilized at the highest potential.

Focus on Personal Finance, Ch. 12

2-I do not think penny stocks are worth the investment. They typically cost less than a dollar but can also be between 1 and 5 dollars. I think of stocks as a gamble. So the more you gamble with the more you could win. And in most cases, the more of a risk you take the more of a potential return. However in this case penny stocks are risker without a good potential return. Plus even if it does pay, it probably will not be much. Also, penny stocks do not have the same benefits or any guarantees.

Focus on Personal Finance, Ch. 13

3-A loaded mutual fund is a mutual fund that changes the investor a fee. Fees can be front-loaded and back-loaded. A front loaded mutual funds charges a sale price on the shares purchased. A back loaded mutual fund charges a fee when shares are withdrawn, and this fee is usually a percentage of the value of the shares that the investor sells. Every mutual fund is required to provide a prospectus to investors. The nature of the fee and the fee amount will be disclosed in the prospectus

o Assessment Activity - Common Stock

4-Ethics is in a broad sense, preferring right over wrong, or preferring a certain set of values over others. Being a logical decision-maker, fear, uncertainty and doubt are considered, in some cases, to actually stall or delay a decision. Ethics is a powerful action, but when it comes to the risk of investment, I would choose to invest in the tobacco company. Tobacco is a high-volume commodity and is not going away. All investments involve some degree of risk. Common stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debt holders have been paid in full. If the company goes bankrupt, the common stockholders will not receive their money until the creditors and preferred shareholders have received their respective share of the leftover assets. This makes common stock riskier than debt or preferred shares. The upside to common shares is that they usually outperform bonds and preferred shares in the long run.

Understanding the Bond Market

5-This video about understanding the bond market was very informative, and putting your money into bonds can be risky depending on the type. Bonds are basically IOU's from the government and big companies that need to borrow money. Bonds have four categories U.S. Government bonds, state and local bonds, corporate bonds and mortgage backed bonds. The U.S. government bonds and the state and local bonds come with less risk, the government bonds are low because they are backed by the government. The corporate and mortgage backed bonds are more riskier, because if the company goes bankrupt or the borrower of the mortgage bond don't pay back you can lose out on your money

Understanding the Stock Market

6-A share of stock is literally a share in the ownership of a company. When you buy a share of stock, you're entitled to a small fraction of the assets and earnings of that company. Assets include everything the company owns (buildings, equipment, trademarks), and earnings are all of the money the company brings in from selling its products and services. The disadvantage of borrowing money is that the company has to pay back the loan with interest. By selling stock, however, the company gets money with fewer strings attached. There is no interest to pay and no requirement to even pay the money back at all. Even better, equity financing distributes the risk of doing business among a large pool of investors (stockholders). If the company fails, the founders don't lose all of their money; they lose several thousand smaller chunks of other people's money.

Types of Savings Accounts

7-Regular Savings Accounts Similar to checking accounts without the check-writing abilities, regular savings accounts are offered at nearly every bank for easy sign-up in person, over the phone, or even online. Although regular savings accounts usually require a higher minimum balance requirement, most banks allow you to link it with your checking account for easy transfers. Money Market Accounts Since money market accounts are insured by the FDIC, there is virtually no risk involved in this investment. While most money market deposit accounts will require you to hand over a higher minimum balance at anywhere from $100 to $2,500, the interest will be significantly higher than regular savings accounts. It is important to note that money market accounts do have a limit on how many withdrawals that you can make monthly. Certificates of Deposit (CDs) Another popular form of savings accounts is certificates of deposit (CDs), which are savings certificates that allow individuals to receive interest periodically over the lifetime of their investment. Available at most banks with FDIC insurance, CDs have maturity dates that can range from just one month to five years, with longer terms usually paying the highest interest rates. In exchange for having a higher fixed interest rate with a CD, you will have restrictions on when you are able to withdraw. If you take money out before it has reached maturity, you will likely need to pay a small penalty charge.

Retirement Accounts and Investment Options

8- The three main asset classes include stocks (equities), bonds (fixed income), and cash and cash equivalents, and each has different levels of risk and return. Finding the balance that is most appropriate for your own situation takes time and effort. Planning for a comfortable retirement is a long-term process that requires time, effort and carefully considered decisions. Understanding the various retirement investments - from annuities to stocks and everything in between - is an important part of the process. As with all investments, it is important to consider an investment's advantages, disadvantages, risks and rewards before making any decisions.