Personal Finance: Investing

Scenario:

Brannon: He likes to invest well established funds. He is invested in both stock index mutual and bond funds. He thinks that diversification is the only way to go and that it will safeguard him from large losses. He does not believe he is taking on any risk with these types of investments.

Answer requirements:

Consider what you have learned about the transaction accounts, bonds and stocks. For each scenario, please answer the following questions:

1. Discuss the appropriateness of the investment actions. Incorporate what we discussed in Unit 1 regarding the risk and return trade off, current interest rates and inflation levels (compared to historical levels) into your answer. Please use references and correctly cite your work.

2. From what we learned in Unit 2, list at least one advantage of his/her chosen course of action.

3. From what we learned in Unit 2, list at least one disadvantage of his/her chosen course of action

* Please make sure to cite your work. (APA format) *