Question

reflection question: what main factors did you think about when deciding which level of risk was right for a person?
exit ticket
amanda wants to invest all of her money in bonds. what should she know before doing this?
plain why stocks are riskier than bonds.

Explanation:

The problem is about investment decisions and risk assessment, which falls under the Business discipline, specifically the subfield of Finance. When deciding the right level of risk for a person, factors like financial goals (short - term vs long - term), time horizon (how long until needing the money), risk tolerance (personal comfort with risk), financial situation (income, savings, debts), and investment knowledge are considered. For Amanda investing in bonds, she should know about bond risks (interest rate risk, credit risk of the issuer), potential returns (usually lower than stocks), liquidity (how easy to sell), and diversification (putting all money in bonds may lack diversification). Stocks are riskier than bonds because stock prices depend on company performance, market conditions, and are more volatile. Bondholders have a fixed income stream and priority in repayment if a company fails.

Answer:

For the reflection question, main factors include financial goals, time horizon, risk tolerance, financial situation, and investment knowledge. For Amanda, she should know bond - specific risks (interest rate, credit), returns, liquidity, and diversification. Stocks are riskier as their value depends on company/market factors, are more volatile, and bondholders have more security in repayment.