Learning ObjectivesStudents will be able to:
| National Standards for Personal Financial Education Investing
|
Learning ObjectivesStudents will be able to:
| National Standards for Personal Financial Education Investing
|
WARM-UP:
Your friend asks to borrow $50 and offers to pay you back with interest. What factors would you consider in your decision to accept or decline their request?
Just as you might loan money to a friend, you can loan money to a government or corporation through a bond. Bonds are one of the most common investment options available to you. Watch this video to learn more about bonds and follow your teacher's directions to answer the questions either in your student activity packet or within the EdPuzzle itself.
NOTE: EdPuzzle videos shuffle answer choices and do not always match the order provided in the lesson here.
All of the following are true about bonds EXCEPT…
Complete this sentence: The higher the risk associated with a bond, the ________ (more/less) likely a corporation might default on paying the investor. Interest rates for riskier bonds tend to be _______ (higher/lower) so that investors are ______ (more/less) willing to take on that risk.
Which tends to be a riskier investment - corporate bonds or government bonds? Why?
Which type of bond would you be comfortable investing in? Explain.
If you buy a bond and hold it through its maturity date, the ups and downs of the bond market will not impact your investment. However, if you decide to sell a bond before its maturity date, you need to understand how the current market’s interest rates impact the price of your bond. Read through this infographic and watch the video to learn more about this relationship. Then, answer the questions.
When overall interest rates rise (to 10%), the bond you already own (with 5% coupon rate) becomes _______ valuable to potential buyers, so its price will __________.
When overall interest rates fall (to 2%), the bond you already own (with 5% coupon rate) becomes ______ valuable to potential buyers, so its price will ____________.
Generally, the longer the duration of the bond, the ___________ (lower/higher) the chance the bond price may change due to changes in yield.
Explain why someone who is not interested in selling their bond before its maturity date does not have to worry about the current bond market and its impact on the price of their bond.
When investing in bonds, most investors choose to invest in bond funds, rather than selecting individual bonds. Watch this video to learn about bond funds and how they differ from bonds. Then, answer the questions.
What are the pros and cons of a bond? How do you make money?
What are the pros and cons of a Bond Fund? How do you make money?
Do you think you would invest in an individual bond or bond fund? Both? Neither? Explain why.
Which of the following most accurately describes what a bond is?
Juan buys a bond with a fixed coupon rate of 3%. Six months later, similar bonds that are issued have a coupon rate of 4%. Which of the following is TRUE if he chooses to sell the bond before maturity?
One difference between bonds and bond funds is…
By the end of a bond's maturity, the investor will have received…
What is default risk?
You've decided you want to sell a bond before its maturity date. Interest rates are currently higher than when you bought the bond. What will you likely have to do to make your bond more appealing to investors?
What does this fund primarily invest in?
What is a key risk of investing in this fund?
What are this fund’s total net assets?
Which benchmark is this fund tracking?
What is the level of risk of this investment?
This fund’s expense ratio is _______. You would pay _______ in fees on a balance of $10,000.
What is the minimum investment for this fund?
If you invested $10,000 in this fund in January 2014, how much would it be worth in December 2023?
What was this fund’s rate of annual return in 2023?
In the last 10 years shown, how many years did this fund have NEGATIVE returns?
Based on this information, do you think this fund is a good investment? Explain why or why not.