give facts or logical reasoning. • In the second paragraph, state the denial or
other bad news. • In the third paragraph, state the action you
want the reader to take. • Close on a positive note.
11-1 Low-Risk Choices
编辑pptSlide 6
What Are Good Financial Market Investments?
• A mutual fund is a professionally managed group of investments.
• It is bought using a pool of money from many investors.
• Savings and checking accounts are liquid.
• Illiquid investments cannot be converted to cash quickly or without a penalty.
11-1 Low-Risk Choices
编辑pptSlide 2
What Are Low-Risk Savings
Options?
• Savings accounts • Money market accounts
o Two types: deposit account or fund
• Certificates of deposit
o Money set aside for specific length of time at a fixed interest rate
11-1 Low-Risk Choices
编辑pptSlide 5
Building Communications Skills
Bad News Messages
• Use an indirect approach. • In the first paragraph, refer to the issue and
What Are Low-Risk Investing Options?
Bonds
• A bond is a loan that a buyer makes to a bond issuer.
• Government and corporations issue bonds.
• The face value is the amountd on the maturity date.
Corporate Bond
Face value: $5,000 Discount rate: 4% Coupon rate: 4% yearly (paid semiannually) Term: 2 years
Purchase price: $5,000 × 0.04 = $200 discount amount $5,000 $200 = $4,800 discounted purchase price
• Life insurance savings plans
o Borrow against the policy’s cash value
• Brokerage accounts
o An account at an investment company
11-1 Low-Risk Choices
编辑pptSlide 3
Chapter 11 Saving and Investing Options
What Are Low-Risk Savings Options?
• Liquid savings include cash or investments that can be changed into cash quickly.
Percent of Holdings
20%
20%
20% 20%
15% 5%
ASSET ALLOCATION
Type of Fund Bond fund
Growth fund
Global fund Money market fund Income fund New venture fund
• A personal residence (home) is typically a safe investment and good tax shelter.
11-2 Medium-Risk Choices
编辑pptSlide 7
Asset Allocation in a Mutual Fund
• The maturity date is the date the borrowed money must be repaid.
• Bonds can be purchased at a discount or premium.
11-1 Low-Risk Choices
编辑pptSlide 4
Return on a Corporate Bond
$ 5,400 total amount received ($5,000 face value + $400 interest) 4,800 amount invested $ 600 total profit in dollars
$600 ÷ $4,800 = 0.125 = 12.5% total return on investment
Semiannual interest: $5,000 × 0.04 = $200 interest per year ($100 semiannual payment) $200 × 2 years = $400 total interest received
Return on investment: At the end of the second year, the bond is redeemed for $5,000 (face value).