![]() Some lenders can also assign financial penalties for missed or late payments. The borrower must agree to the repayment terms, including the amount owed, interest rate and due dates. The lender can ask for interest payments in addition to the original amount of the loan (principal). The specific terms of a loan are often spelled out in the form of a promissory note or other contract. What a loan is: A loan is a financial transaction in which one party (the lender) agrees to give another party (the borrower) a certain amount of money with the expectation of total repayment. What a loan is, what interest is, and how the annual percentage rate (APR) measures the true cost of a loan. governmentĮxplain to your merit badge counselor the following:Ī. savings bonds are considered one of the safest investments because they are backed by the full faith and credit of the U.S. Department of the Treasury to help pay for the U.S. savings bonds are debt securities issued by the U.S. savings bondī-an investment program funded by shareholders that trades in diversified holdings and is professionally managed.Ĭ-insurance that pays out a sum of money either on the death of the insured person or after a set period.ĭ-a certificate issued by a bank to a person depositing money for a specified length of time.Į-a bank account that earns interest/U.S. Explain to your merit badge counselor the advantages or disadvantages of saving or investing in each of the following:Ī. Pretend you have $1,000 to save, invest, and help prepare yourself for the future. How much the price changed high and the 52-week low prices. Importance of the following information for each stock:Ī. Explain to your merit badge counselor the Select five publicly traded stocks from the business section of the newspaper. ![]() Simple interest is calculated on principal only, Compound interest is calculated on total of principal plus the interest earned. RoI = (gain from investment – cost of investment)/cost of investmentĮxplain the concepts of simple interest and compound interest and how these affected the results of your investment exercise: Risk - Possibility of your investment losing the money you put in. Saving has a guaranteed low return with loss of money possible if you go over the insurance amount of $250,000 per account named depositor, per insured bank.(as of 6/7/09) Investing has a risk of losing you money but chance of a higher return.Įxplain the concepts of return on investment and risk: The concepts of simple interest and compound interest and how these affected the results of your investment exercise.Įxplain the differences between saving and investing, including reasons for using one over the other: The concepts of return on investment and risk. The difference between saving and investing, including reasons for using one over the other.ī.
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