Part one:
Post a 150- to 225-word (2- to 3-paragraph) explanation of the differe
Part one:
Post a 150- to 225-word (2- to 3-paragraph) explanation of the differences between gambling and investing. In your explanation, answer the following:
How would you describe the difference between gambling and investing?
What are the risks and potential pitfalls of investing that might cause someone to make the statement that “playing the stock market is like gambling”?
What are 2 or 3 ways that an individual or organization could mitigate the risks and potential pitfalls of investing?
Part two:
Explain the differences between the arithmetic return and the geometric return. Include in your explanation what factor determines the difference between arithmetic returns and geometric (compounded) returns. (75–150 words, or 1–2 paragraphs)
If you own a stock with volatile returns over a 2-year period, will the average return be higher or lower than the geometric return? Explain why. (75–150 words, or 1–2 paragraphs)
Why is it more convenient to display your investment returns in percentage terms rather than dollar terms? (75–150 words, or 1–2 paragraphs)
Would a common stock or a corporate bond demand a higher risk premium? Explain why. (75–150 words, or 1–2 paragraphs)
What are the differences between a bond risk premium and an equity risk premium? (75–150 words, or 1–2 paragraphs)
Explain whether it is possible to earn excess returns without taking on additional risk. (75–150 words, or 1–2 paragraphs)
