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can only pay$2.00Chapter 11: Retirement & Estate Planning Chapter 12: Investing Chapter 14: The Practice of Investment Read information posted in Content and Articles folder. HOMEWORK: Chapter 11: 11.2 #2 (p. 276) Chapter 12: 12.3 #4 (p. 305) Chapter 14: 14.1 #1 (p. 340) Chapter 11  1. Do you participate in an employer-sponsored retirement savings plan? If so, what kind of plan is it, and what do you see as the benefits and drawbacks of participating? If you contribute to your plan, how did you decide how much to contribute? Could you contribute more? In searching for your next good job, what kind of retirement plan would you prefer to find in the new employer’s benefit package, and why? 2. As part of your planning, how can you estimate what you can expect from Social Security as a contribution to your retirement income? Find this answer by going to http://www.ssa.gov/retire2. Using the menus at this site, find out your retirement age. How many credits toward Social Security do you have now? How many do you expect to accumulate over your working life? Use one of the benefit calculators to find your estimated Social Security benefit. How much could you receive monthly? Would you be able to live on your Social Security alone? How much more would you need to save for? What would happen if you continued to work or went back to work after taking your retirement benefit? What would happen if you took your benefit before your full retirement age? Chapter 12 Selecting a security to invest in, such as a stock or fund, requires analyzing its returns. You can view the annual returns as well as average returns over a five-, ten-, fifteen-, or twenty-year period. Charts of returns can show the amount of volatility in the short term and over the longer term. What do you need to know to calculate the annual rate of return for an investment? Consider that at the beginning of 2010 Ali invests $5,000 in a mutual fund. The fund has a gain in value of $200, but generates no income. What is the annual percentage rate of return? What do you need to know to estimate the expected return of an investment in the future? If the fund Ali invests in has an average fifteen-year annual return of 7 percent, what percentage rate of return should he expect for 2011? Find the estimated annualized rate of return for a hypothetical portfolio by using the calculator athttp://www.mymoneyblog.com/estimate-your-portfolios-rateof-return-calculator.html. Saylor URL: http://www.saylor.org/books Saylor.org 305 2. Try the AARP’s investment return calculator athttp://www.aarp.org/money/investing/investment_return_calculator/, experimenting with different figures to solve for a range of situations. Use the information on that page to answer the following questions. Can the future rate of return on an investment be estimated with any certainty? Do investments that pay higher rates of return carry higher volatility? Do investments that pay higher rates of return carry higher risk? What accounts for differences between the actual return and the expected return on an investment? 3. The standard deviation on the rate of return on an investment is a measure of its volatility, or risk. What would a standard deviation of zero mean? What would a standard deviation of 10 percent mean? 4. What kinds of risk are included in investment risk? Go online to survey current or recent financial news. Find and present a specific example of the impact of each type of investment risk. In each case, how did the type of risk affect investment performance? 12.4 Diversification: Return with Less Risk Chapter141. What four measures are the most important indicators of the health of the economy? What are the other leading economic indicators? Go to a financial news source to find out the status of all the economic indicators at this time. Make note of your findings and the date for purposes of comparison. How does the information inform you as an investor? Discuss with classmates the implications of the economic indicators for investing. For example, read the results of the most recent Consumer Confidence Survey athttp://www.conference- Saylor URL: http://www.saylor.org/books Saylor.org 341 board.org/economics/ConsumerConfidence.cfm. How might these survey results inform you as an investor? 2. Read an article summarizing the index of leading economic indicators for May 2009 at http://www.bloomberg.com/apps/news?pid=20601103&sid=aNHH_lMhARc4. How might an investor have used the reported information in making investment decisions? Survey the indexes listed in Figure 14.2 "Examples of Security Indexes". What role might each index play in choosing assets for a portfolio? 3. Visit the SEC’s EDGAR site at http://www.sec.gov/edgar.shtml. Take the tutorial to familiarize yourself with how the site works and then click on “Search for Company Filings.” Input the name of a company with publicly traded stock of interest to you. Then click on the company’s most recent annual report it filed with the SEC. Read the annual report in its entirety, including parts you don’t understand. Jot down your questions as you read as if you are thinking of buying shares in that company. What information encourages you in that decision? What information raises questions or concerns? Go to the company’s Web site and check its online documents, news, updates, and the current status of its stock. Are you further encouraged? Why or why not? Where can you go next to get data and commentary about the company as an investment opportunity? 4. Survey the news sources listed in Figure 14.4 "Sample of Financial News Sources" and number the sites to rank them in order of their usefulness to you at this time. Record in your personal finance journal or My Notes your top five sources of financial information and why you chose them. 5. Have you ever mistaken a press release or a blog for hard news when looking for information online? Read the interviews with journalists, bloggers, and others debating the reliability and accuracy of news disseminated through the Internet athttp://www.pbs.org/wgbh/pages/frontline/newswar/tags/reliability.html. This PBS Frontline special delves into the questions of the credibility and reliability of news information, including financial news and blogs that we access online. Commentators include Ted Koppel, Larry Kramer, Eric Schmidt, Craig Newmark, and others. Discuss with classmates the positions taken in this debate. In My Notes or your personal finance journal, write an essay expressing your own