Ch 10- Why Is This Important to Me? - The Cost of Capital 1. What are your thoughts on borrowing, Investing, and lending? Have you ever borrowed, Invested, or lent money? Most of us can only invest or send money if we have disposable funds left over from our Income. Sometimes we are forced to spend more than we com --such as when the car that we use to get to school or work breaks down or we need to purchase food, water, or fuel before a blizzard or hurricane- and borrow funds to make these purchases. Think back to a time when you've had to borrow money, as well as a time when you've invested your disposable income. What did you do then, and what would you do now? Use the following scale to complete the survey that evaluates potential financial concerns you might encounter as a student. (Note: There are no wrong answers, Add up the numbers after you answer the questions to determine the manner in which your personal relationship with finance might affect you. This exercise is intended to help you determine how you will connect, relate, and apply the concepts in this chapter to your daily life. 1. No, I've never done this and won't do it in the future. 2. No, I've not done this in the past and may or may not do it in the future. 3. I don't remember if I've done this before and may or may not in the future. I wish I knew more about this tople. 4. Yes, I've done this before and may or may not do it in the future. 5. Yes, I've done this and will do it in the future. Have I ever... a. Have I ever borrowed money from anyone before? Did I have to pay interest on the loan? If I were required to pay interest and the interest rate doubled, how would I respond, assuming that my income did not change? b. Have I ever invested any of my money, such as opening a savings account, purchasing stock, or lending money to anyone? Did I earn a return on my investment, such as interest income or dividends? If my return doubled, how would I respond? c. I would like to purchase a certificate of deposit (CD) that is expected to pay a return of 4%. Would I ever borrow money at a rate of 8% to make this investment? d. Have I altered my borrowing, spending, saving, or investing behaviors in response to a change in the Federal Tax Code? e. Do I keep track of the stock market and how it performs as measured by the Dow Jones Stock Index