Define investment and discuss the overall purpose people have for investing.

As a student, are you saving or borrowing? Why?

Divide a persons life from ages 20 to 70 into 10-year segments and discuss the likely saving or borrowing patterns during each period.

Discuss why you would expect the savingborrowing pattern to differ by occupation (for example, for a doctor versus a plumber).

The Wall Street Journal reported that the yield on common stocks is about 2 percent, whereas a study at the University of Chicago contends that the annual rate of return on common stocks since 1926 has averaged about 10 percent. Reconcile these statements.

Explain why you would change your nominal required rate of return if you expected the rate of inflation to go from 0 (no inflation) to 4 percent. Give an example of what would happen if you did not change your required rate of return under these conditions.

Give an example of a liquid investment and an illiquid investment. Discuss why you consider each of them to be liquid or illiquid.