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Exam (elaborations)

FHCE 3200 Exam 3 Quiz Questions Questions and Correct Answers/ Latest Update / Already Graded

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FHCE 3200 Exam 3 Quiz Questions Questions and Correct Answers/ Latest Update / Already Graded

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FHCE 3200 Exam 3 Questions and Correct
Answers/ Latest Update / Already Graded
the possibility of losing money

Ans: risk


prices increase over time

Ans: inflation risk


a company in which you invest closes

Ans: business risk


general interest rates increase

Ans: interest rate risk


you cannot sell something you own due to a weak market

Ans: liquidity risk


money you make on an investment

Ans: return


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actual percentage return

Ans: nominal return


1% return for your bank account

Ans: nominal return


inflation-adjusted return

Ans: real rate of return


If prices increase by 3%, you really lose 2% in purchasing power

Ans: real rate of return


Real rate of return formula

Ans: (1+nominal return)/(1+inflation rate) -1


perception of the riskiness associated with a behavior or decision

Ans: subjective risk




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based on your personally developed probabilities of potential losses

Ans: subjective risk


based on expectations, fears, and worries

Ans: subjective risk


varies from one person to another

Ans: subjective risk


ranking of risk using actual statistics

Ans: objective risk


can be measured using probabilities

Ans: objective risk


money put aside for short-term goals

Ans: savings


assets purchased to reach long-term goals


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Ans: investments


how quickly you can convert an asset into cash

Ans: liquidity


cash in your pocket

Ans: liquidity


assets held in banks and credit unions

Ans: liquidity


usually generates lower returns

Ans: liquidity


What needs to be very liquid?

Ans: an emergency fund


immediately accessible in case of unexpected expenses

Ans: emergency fund


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