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Economics · Studypool

2.2 How do you determine your preference for risk?

Overview

Read the document to complete 2.4 Exercise #2

Construct a work sheet with your transaction, precautionary, and speculative demand items with the risk, liquidity, and yield requirements for each of 20 items. Add a column for the type of investment you would seek to use for each item given the risk, liquidity and yield requirements.

Transactions Demand

Number

Item

Risk

Liquidity

Yield

type of Investment

1

Food

low

weekly

low

checking account

2

Car

low

monthly

low

money market

.

.

20

Precautionary Demand

Number

Item

Risk

Liquidity

Yield

type of Investment

1

2

,

,

5

Speculative Demand

Number

Item

Risk

Liquidity

Yield

type of Investment

1

2

.

.

5