assignment 4.docx - 1 Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial

assignment 4.docx - 1 Describe a real or made up but...

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1. Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial reserve. (3-6 sentences. 2.0 points) I would use money from a financial reserve if I were to have a medical emergency. Let’s say I were to be diagnosed with stage 2 leukemia. I would have to pay an abundance of hospital bills for my treatment with money I would not, necessarily, have to spend on every other day expenses 2. How many months' worth of expenses do you think your financial reserve should include? Describe at least two reasons for this decision. (3-6 sentences. 2.0 points) 6 months because I could lose my job. It will make me go into my financial reserve. I may also have to pay medical bills because someone got sick or injured. 3. Would you rather have a savings account that offered simple interest, or an account that offered compound interest? Why? (3-6 sentences. 2.0 points) I would rather have a compound interest when it comes to a savings account. An account with simple interest will take money from you, rather than save it. When it comes to putting money into an account that offers interest, you want to get the highest interest rate possible, so that your money grows as fast as possible. A compound interest will “compact” your money as much as possible, saving you more 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why? (3-6 sentences. 2.0 points) The more often it is compounded the better. So daily is the best, next is weekly, monthly etc. The greater the number of compounding periods, the better it is for your
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  • Spring '14
  • PhillipT.Kolbe

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