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FIN 420 - Week 3 - DQ 1 - My sister is very frugal and...

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Evaluate your personal risk tolerance using Exhibit 11-2 A Quick Test to Measure Investment Risk in Ch. 11 of Focus on Personal Finance. Based on your results, were you considered more conservative or less conservative? What factors affected your investment choices? Consider a friend or family member who is more conservative or less conservative than you. How do their money management behaviors differ from your own? According to the quiz I am at the low end of the less conservative investor, this actually surprised me. I may like to shop, but I don’t like to gamble and am uncomfortable with investing due to the risk. My answers were dictated by how much I had to lose. In the scenarios where I was being given something with no previous investment such as the prize money and the shares for the start-up company I was more willing to take a risk with those funds. However in the scenarios where I was making a personal investment, I was less likely to risk losing my initial investment.
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Unformatted text preview: My sister is very frugal and extremely conservative. She does not risk on any level and would definitely not make the same financial choices I would make. My sister is very good at saving; she cuts coupons, only shops sales and has all these things she makes from scratch (like natural household cleaners and dryer sheets) to save money. She is excellent at managing the finances for her family and I know one day she will be able to enjoy the fruits of her labor. I do not have the time or the energy for any of those things, nor are they as high up on my priority list as they are to my sis! However, I have extra money being withheld from my check; these funds are then used that is used to purchase company stocks at a reduced rate every six months. It’s nothing more than different methods, same goals. Who is right and who is wrong? I am not sure there is a right or wrong, just case of deciding what life will look like for you at retirement and working towards that goal....
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