Your friend tells you, "Stocks are risky, and also over the permanent the stock market has an adverse rerotate." How would certainly you respond?
Even though stocks are risky, over the irreversible the stock industry has actually a positive rerevolve. If you have the majority of time to invest, investing in stocks would certainly permit you to save up through inflation and also accumulate even more retransforms compared to bonds or saving.

You are watching: What is the relationship between risk and return quizlet

Explain why compound interest is crucial as soon as it involves investing for a irreversible goal (e.g., retirement).
Compound interest is crucial when it pertains to investing for a irreversible goal bereason it accumulates interemainder from prior interest. Longer the term, the more you accumulate interest with compound interemainder. In the brief term, you will not be making sufficient interest for the compounded interemainder to be as considerable.
Your friend is considering investing in Apple given that he knows that their following iPhone release is certain to be a hit and also their stock price will rise. What would you tell him?
If they are certain that the stock price will rise, they need to invest. If he is over-confident about Apple"s new iPhone to be a hit and only has actually indevelopment the basic public has actually, he can desire to retake into consideration investing in Apple.
Under/over-perdeveloping on projected salesChange in leadershipMacroeconomic factorsCompetition in the marketBad news headlines
Young civilization are not investing because they believe they are not educated sufficient to invest and that they think they execute not have actually enough money to invest.
One disbenefit of waiting to invest is that the much longer the term you invest, the much less most likely you are going to lose money. Therefore, by waiting to invest, you are putting yourself at more hazard to shed money investing.
A frifinish mentions that he has a family member that earned millions investing in Amazon stock over the years and says that you should spfinish your time trying to find the next Amazon. Is this an example of diversification?
No. Finding the next Amazon and also investing it in solely that will be placing all of the eggs in the exact same basket.

See more: It'S Better To Drive From Orlando To Charleston Sc To Orlando Fl Drive Time

How have to a young person think around separating their assets between stocks and also bonds? Why would you recommfinish this?
A young perchild must separation their assets between stocks and also bonds at a 8:2 ratio. I recommfinish 80% stocks bereason a young person is able to have actually a longer term investing which also reduces danger.