Your textbook says, “In the world of finance, there is one certainty: you must take more risk to earn a higher return.” It then identifies these types of risk: inflation risk, business risk, interest rate risk, and liquidity risk.

Risk is a consideration in many of the decisions we make. Describe a risky financial decision made by you or someone else. What were the downsides of the decision? What were the upsides?

How might your financial goals and personal financial plan impact the amount of risk you are willing to take on with regard to a financial decision?


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