3 Discussion Questions, 3 Student Reponses .. and 2 Assignments

ECO110: Taking Charge of Your Economic Future

Week 7 Discussion Question

Part 1: Risk

Your textbook says, “In the world of finance, there is one certainty: you must take more risk to earn a higher return.” It then identifies these types of risk: inflation risk, business risk, interest rate risk, and liquidity risk. 

Risk is a consideration in many of the decisions we make. Describe a risky financial decision made by you or someone else. What were the downsides of the decision? What were the upsides?  How might your financial goals and personal financial plan impact the amount of risk you are willing to take on with regard to a financial decision? Please respond to at least one classmate’s post.

Part 2: Student Response (Respond to the Student below)

Vatleria Thomas 

RE: Risk

Class, 

I have a close friend who purchased a nice four-bedroom home did some upgrades and added a pool plus a jacuzzi to the back. It turned out to be a costly project, but the home was now updated with a lot of curb appeal. He let some friends convince him to AIRBNB it for the weekends when he wasn’t home. Not knowing some of the risk of having other people in your home was the costliest part of making the decision would be more on the downside. On the other hand, he made more money than he estimated and imagine he would bring in would more on the upside. Since COVID-19 required most of us to work from home he went and purchased a much smaller home to work from on a daily basis and rents out the AIRBNB home everyday now. The AIRBNB brings in enough to covers both homes mortgages. As I stated in last week’s discussion, I was looking into buying a forever/retirement home around last year. Now this year would have been the opportune year to purchase because of the interest rates but the economy was too shaky for me plus home prices went up. I’ll just put this off for another year or two and save until I have a better feel for the economy.  

Bottom of Form

Bottom of Form