If people took a logical approach to managing their personal finances, they would likely be in a better position
Emotions, however, often play a role in financial decision making. What emotion significantly affected how people managed their finances during the Great Recession, and why?
What will be an ideal response?
Answer: Fear often plays a large role in the way people think about their finances in hard times. Worry and anxiety over money can physically affect people's ability to think clearly. People with money problems tend to hold on to what they have and not make changes that might be beneficial.
Explanation: Fear about money creates worry and anxiety that can impair people's ability to process information clearly. People driven by fear over personal finances often express loss aversion, holding on to what they have rather than making helpful changes to a portfolio. Some believe this worsened impacts of the Great Recession.
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$1 million is invested at 6% for 10 years. How much additional proceeds is earned if the rate is compounded semi-annually compared to simple interest?
a) $600,000 b) $190,848 c) $1,790,848 d) $1,190,848 e) $206,111
Although insurance benefits society in many ways, there are some social costs associated with insurance. These social costs include all of the following EXCEPT:
(a) insurers' cost of doing business (b) inflated claims (c) indemnification of losses (d) fraudulent claims