2.  Investment: directing resources from being consumed today in order to prepare for the future. ◦ National Forests ◦ Starting a Business ◦ Using assets to earn income or profit.

3.  Financial Assets: documents that prove you have saved money. ◦ You receive statements in the mail or email that show how much money you have. Savers Financial Institutions Investors

4.  Banks, Savings and Loan Associations, and Credit Unions  Finance Companies: Lend to risky customers, high fees and interest rates.  Mutual Funds: allow for investment in a broad range of companies on the stock exchange.  Life Insurance Companies: Provide financial protection for families of insured.

5.  Pension Funds: after working for a certain amount of years, employees are given this money as retirement.

6.  It’s a good idea if you are going to invest, to invest in a lot of different things. This reduces risk.  It’s called diversification.

7.  Provide information called prospectus to people looking to invest.  Banks, mutual funds, etc gather information on how their customers money is doing…this is a portfolio.

8.  Financial Intermediaries provide investors with easy money.  Example: if you put money into a mutual fund, but then needed to take it out to pay for college, you could do so easily.

9.  Savings Accounts: safe, easily accessible but low return  CD: safe, hard to access but high return.

10.  If you invest in a new company, you run the risk that you will not get any of your money back.  Higher the return, greater the risk  Lower the return, les the risk

11.  Answer Questions #1-8 on page 275.