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2. The U.S. Nuclear Regulatory Commission asks the following three questions to measure the magnitude of a potential risk: (1) what can go wrong, (2)

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2. The U.S. Nuclear Regulatory Commission asks the following three questions to measure the magnitude of a potential risk: (1) what can go wrong, (2) how likely is it, and (3) what are the consequences? These questions can also be used to determine the riskiness associated with holding assets in a savings account for an emergency fund. Based on your answers, what would be a reasonable rate of return from such an account? 3. Explain why inflation risk can be just as dangerous as volatility for investors and savers. 4. Calculate tip has annual expenses of $45,000. Calculate how much Tip should hold in his emer- gency fund. 5. Describe the association between risks and returns. Sketch the association between these two concepts

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