2. To be able to analyze the risk of an investment.

3. 1. Inflation  The consistent rise in prices of goods and services over time  Example – McDonald’s hamburger in 1967 costs 10 cents, now it costs about a dollar  Why?

4. 1. Inflation  If your rate of return is less than the inflation rate, you are actually losing the value of your investment – EVEN IF YOU HAVE MORE MONEY! Item19992009 Dozen Eggs$1.15$1.35 Gallon of Milk$1.46$3.27 Gallon of Gas$1.12$2.78

5. 2. Interest Rate  If the Federal Reserve adjusts interest rates, you might be locked into a higher or lower interest rate than what is currently available

6. 2. Interest Rate  Adjustable – Rate for your investment changes with the Federal rates  Fixed – Rate stays the same throughout the loan or investment

7. 3. Business Failure  Investments in companies that go bankrupt are lost!  This can be minimized depending on the company

8. 4. Financial Market  The public’s perception of the economy and various financial markets

9. 5. Global Events  When events around the world effect the value of certain investments  Example: After 9/11, which investments lost value? Which gained value?

10. How would you change the risk continuum after knowing the types of risk?

11. To be able to analyze the risk of an investment.