Investment Risks and Real Estate Concepts

Section 2 Lesson 1

• Balancing risk involves understanding key elements.
• Risk and return have a correlation.
• Random risk has another name.
• Diversification is a risk management technique.
• Market risk has names.
• Business failure risk is a type of risk.
• Inflation risk is a type of risk.
• Time-horizon risk exists.
• Regulatory risk is a factor.
• Business cycle risk is present.
• Market volatility risk is a type of risk.
• Global investment risk exists.
• Liquidity risk is a type of risk.
• Marketability risk is a type of risk.
• Reinvestment risk should be considered.
• Damage and security deposits have differences.
• Periodic and specified time tenancies have differences.
• Subleasing is a rental agreement.
• Tenants possess certain rights, even without a written lease.
• Condominiums and co-ops have structural and ownership differences.
• The price-to-rent ratio is an indicator.
• Mortgage points involve a cost factor.
• A warranty deed provides a guarantee.
• PITI is an acronym in real estate.
• Loan to value ratio measures risk.
• Mortgage insurance can be obtained from sources.
• Buying or renting has long-term cost implications.
• An amortization schedule shows loan payments.
• Factors affect mortgage payments.
• Conventional mortgages and ARMs differ.
• ARMs should be used carefully.
• A bull market has specific traits.
• A bear market has specific traits.
• A market correction is a term.
• Market timing may not be a good investment strategy.
• Long-term investors should avoid trading mistakes.
• Market efficiency is a concept in finance.
• Herd behavior exists.
• Doubling down exists.
• Complete Section 2 Lesson 1 quiz.
• Compare full-service, discount, and online brokerage firms.
• SIPC provides coverage.
• Margin has a specific meaning in investing.
• Buying long and selling short are different.
• Investment grade bonds and speculative grade bonds have differences.
• Corporate bonds are issued by corporations.
• Bond ratings assess credit risk.
• Treasury securities are government debt.
• Municipal bonds are issued by local governments.
• Default risk is the risk of non-payment.
• Interest rate risk exists.
• YTM is a key metric for bonds.
• Bond investors should make decisions.
• The buy and hold strategy is a passive approach.
• Dollar cost averaging is an investment method.
• Asset allocation requires investments.
• The 110 Rule may be useful.
• The 120 Rule may be useful.
• Simple and compound interest work differently.

Section 2 Lesson 2

• Estate planning prepares for asset distribution.
• Probate is a legal process.
• Non-probate property passes outside of probate.
• Transfer by contract occurs through methods.
• A contingent beneficiary receives assets under certain conditions.
• Tax evasion and tax avoidance are different.
• Taxable and tax-advantaged accounts differ.
• Progressive and regressive taxes work differently.
• A marginal tax rate is a key concept.
• The effective marginal tax rate is calculated.
• The average tax rate is calculated.
• Calculating income taxes involves steps.
• Earned income is a type of income.
• Short-term and long-term gains have tax implications.
• Gross and adjusted gross income are different.
• Standard and itemized deductions affect taxable income.
• A tax credit reduces tax liability.
• POP is an acronym.
• FSA is an acronym.
• Tax sheltered investments exist.
• Unearned income is a type of income.
• A pass-through deduction may be available.
• Complete Section 2 Lesson 2 quiz.

Section 2 Lesson 3

• Physical, morale, and moral hazards are different types of risks.
• Co-insurance, co-pay, and deductible are healthcare cost-sharing mechanisms.
• ADLs are activities of daily living.
• Short-term and long-term disability differ in duration and coverage.
• Social security disability income insurance has eligibility requirements.
• Upon death, financial needs must be met.
• Social security survivor's benefits assist families.
• Multiples of earnings and needs-based approaches are used for financial planning.
• Inflation protection is important for disability policies.

Life Insurance

• Financial losses that can occur from dying too soon may need coverage through life insurance.
• Life insurance helps cover final expense needs.
• Life insurance helps cover income replacement needs.
• Life insurance helps cover readjustment period needs.
• Life insurance helps cover college expense needs.
• Life insurance helps cover other special needs.

Types of life insurance

• There are multiple types of life insurance.
• Guaranteed renewable term life insurance exists.
• Level premium term life insurance exists.
• Decreasing term life insurance exists.
• Convertible term life insurance exists.
• Group term life insurance exists.
• Credit and mortgage term life insurance exists.
• Whole life insurance is a type of cash value life insurance.
• Adjustable life insurance is a type of cash value life insurance.
• Modified life insurance is a type of cash value life insurance.
• Universal life insurance is a type of cash value life insurance.
• Variable life insurance is a type of cash value life insurance.
• Variable universal life insurance exists.

Homeowner’s insurance

• Named perils homeowner's insurance exists.
• All-risk perils homeowner's insurance exists.
• Liability coverage is part of homeowner's insurance.
• Renters insurance (HO-4) exists.
• Single-family dwellings have HO policy coverage.
• HO-1, HO-2, HO-3, HO-5 and HO-8 policies exist.
• A Condominium has a HO-6 policy.

Automobile insurance

• Various types of automobile insurance exist.
• Collision and comprehensive coverage differ.
• Underinsured motorist insurance is important.
• Liability losses can be covered.
• Medical payments can be covered.
• Protection against underinsured or uninsured motorists.
• Physical damage (collision) is covered.

Healthcare insurance

• There are different plans for healthcare insurance.
• Group Health plans are available.
• Indemnity plan (fee for service) healthcare insurance exists.
• Traditional Health plans are available.
• HMO (Health Maintenance Organization) plans exist.
• PPO (Preferred Provider Organization) plans exist.
• PSN (Provider-Sponsored Network) plans exist.
• ACO (Accountable Care Organization) plans exist.
• High deductible health plans exist.
• HAS (Health Savings Account) exists.
• Government plans exist.
• Workers' Compensation exists.
• Medicare exists.
• Medicaid exists.
• Insurance policies must meet standards.
• All healthcare plans meet health benefits.
• Factors affect the cost of health insurance.
• ACA (Affordable Care Act) health care plans have types.

Specialized insurance

• Umbrella insurance is a type of specialized insurance.
• Flood and earthquake insurance are types of specialized insurance.
• Professional liability insurance is a type of specialized insurance.
• Floaters insurance is a type of specialized insurance.

Section 2 Lesson 4

• Pure risk and speculative risk have differences.
• Handling risk involves strategies.
• Fiduciary and suitability standards for financial advice differ.
• Financial planners can be compensated through ways.
• Investment risk exists.
• Risk-free investments are considered safe.
• Loss control minimizes losses.
• A risk premium compensates for risk.
• Conservative investors are risk-averse.
• Moderate investors balance risk and return.
• Aggressive investors seek high returns.
• Active and passive investing differ in management style.
• Debt and equity are different forms of financing.
• Real rate of return accounts for inflation.
• Long-term investors should avoid trading mistakes.
• Market efficiency is important in investment.
• Herd behavior is a bias.
• Investment Risk Pyramid exists.
• Complete the section 2 lesson 4 quiz.
• Complete the section 2 assessment.