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YFF-Level-1-Activity-9

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									Your Financial Future
Level 1


UK Edition




September 2011
 Activity 9: Weighing Risks and Rewards


 • An investment is something you put money, time,
   or energy into in the hope of getting something in
   return - a reward.

 • Return is what you hope to get back from your
   investment. It is your reward for investing.

 • Risk is the chance that you will not get the return,
   or reward, you were hoping for from your
   investment.




Bank of America Merrill Lynch                             2
 Activity 9: Weighing Risks and Rewards


 School Fayre Example: Making Greetings Cards
       • You are investing both money (to buy the materials) and time (to make / advertise
         them).
       • What are some of the risks involved? Your investment could actually lose money or
         waste your time. Here’s how:
             • What if no one wants to buy the greetings cards? You have then lost time, money,
               and are stuck with the cards.
             • What if the cost of the materials goes up, and you make less money than you had
               hoped for on each greetings card that you sell?
       • What are the possible returns or rewards for your investment?
          • You sell 50 greetings cards at £2 each. Your cost per card was £1, so you’ve
            earned £50 for your class on the cards you’ve sold (50 greetings cards X £2 per
            card, less 50 cards X £1 per card).
          • You make some new friends as a result of your efforts.



Bank of America Merrill Lynch                                                                     3
 Activity 9: Weighing Risks and Rewards


 • Complete the Risk and Reward worksheet.
   This should take approximately 15 minutes.
   You can work in pairs if you want.

 • I will ask for volunteers to discuss your
   answers.




Bank of America Merrill Lynch                   4
 Activity 9: Weighing Risks and Rewards


 3. Review:
       a) What are some other examples of risk?
       b) What are some rewards that are related to that risk?
       c) Why are risk and rewards important to think about in your life?




Bank of America Merrill Lynch
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