Chapter 6 a - Chapter 6: Managing Your Money Chapter...

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Chapter 6: Managing Your Money Chapter Objectives Provide a background on money management Describe the most popular money market investments Identify the risk associated with money market investments Explain how to manage the risk of your money market investments Background on Money Management Money management: a series of decisions made over a short-term period regarding cash inflows and outflows Liquidity: your ability to cover any cash deficiencies that you may experience Related to your personal cash flow statement Background on Money Management (cont’d) Adequate return Dependent upon the risk-free rate and the level of risk you are willing to tolerate Usually should consider multiple investments with varied returns and levels of liquidity Money Market Investments Checking Account—also called demand deposit account Enables you to track spending Overdraft protection: an arrangement that protects a customer who writes a check for an amount that exceeds the checking account balance
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Chapter 6 a - Chapter 6: Managing Your Money Chapter...

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