Saving, Investing, Compounding & Risk — Drills · Grade 12 Social Studies
Chapter: Household Finance & Major DecisionsWhat these drills covers
By the end of Saving, Investing, Compounding & Risk you should be able to:
- I can identify the claim and instrument.
- I can explain a civic or economic mechanism using evidence, assumptions, and a qualified conclusion.
4 questions, written answer, each with a worked explanation.
Vocabulary used: stock, bond, diversification, nominal return, time horizon.
Problem 1
Answer and explanation
They determine rights, access, and relevant risks. Ownership, debt, and deposits differ, and a resource may lose value or be unavailable when needed. A higher advertised return does not resolve those conditions.
Problem 2
Answer and explanation
The second year earns five percent on $1,050 rather than only the original $1,000. That adds $52.50 instead of $50. The $2.50 difference follows the constant-rate, no-cost model, not a promised market outcome.
Problem 3
Answer and explanation
A fixed dollar fee and a percentage charged on different balances can produce different outcomes. Define the balance, date, and excluded effects before calculating net return. Otherwise the comparison can overstate the amount retained.
Problem 4
Answer and explanation
The holdings may share an industry, borrower, region, or common risk. Different names do not guarantee independent exposures. Diversification can reduce certain risks while leaving broad market and other losses possible.