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A worksheet lesson introducing students to the concept of Risk and Return. Risk and return is a basic principle that should be understood before investing money.





Risk and Return





Percentages (optional)

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Worksheet is customizable for multiple levels.



Suggested Lesson Plan for this Worksheet

Before investing your money, you will have to understand the important concept of risk and return.  Risk and return means that the returns you will get when investing your money will vary.  You may even lose money.  However, no matter what you do with your money, you are always taking some amount of risk.  If you keep your money at home, you risk that it could be lost or stolen.  If you place your money in a bank account, you risk that the returns that you get will not be high enough.

Risk and return also means that if you take greater risks, you should expect to get greater returns.  If you want the possibility of getting greater returns, you need to invest your money in more risky investments, for example bonds or stocks.  Different bonds and stocks even have different degrees of risk.

So how much risk should you take with your money?  That depends on many different factors including your age, risk tolerance, and investment objectives.  No matter where you invest your money, you first should understand the investment's risks and potential rewards.


Additional thoughts on risk and return:

The risky investment in this exercise may be stocks, or may be another type of investment.  If you consider the risky investment to be stocks, many people believe that stocks outperform safe investments over the long-term, and therefore showing negative returns (as this worksheet lesson does) may give a false impression that stocks are not good investments.

Our thought is that while it has been true that stocks and bonds have historically outperformed safe investments over the long-term, in the short term you could lose significantly with them.  Also, you could lose significantly if you own particular stocks, rather than a diversified basket of stocks.

Also, even though stocks have outperformed in the past, there is no guarantee that they will in the future -- that is what makes them risky investments -- even over the long-term.  Many people thought stocks would always give positive returns at the top of the market in March, 2000.  No investment return is ever guaranteed  -- there is always a risk.  We can look at historical returns to get a sense of what we may get in the future, however, the past is never a guarantee of the future.


WORKSHEET Instructions


This worksheet is an introduction to investing and the concept of risk and return.  Students need to fill in the table with the missing values for each of the problems.


This worksheet has two parts, first a Safe Investment, and next a Risky Investment.  A safe investment will give you a specific return.  The risky investment's returns will vary.


For both types of investments, there are several columns of information.  The first column is the money to invest.  This is the amount that is available for investment.  The next column is the return that will be earned on that investment.  The next two columns need to be filled in by the student.  Gain/Loss is the dollar amount of money earned for the year.  The last column is Total, which is the beginning money to invest plus the gain/loss.  As an option, the gain/loss may be automatically filled in, leaving the student only to calculate the total (no percentages calculations).


This is a random worksheet. You may choose a standard worksheet or customize the worksheet to your teaching needs.


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This worksheet may be customized with the following settings.

Make any changes you wish, then press "Get Worksheet".



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Money to Invest $


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NOTE: Answers appear on a separate page when printed.




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Risk and Return




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