Question

You are a student at ABC University. You recently read in the school's daily newspaper about a terrific investment opportunity that promises to repay you a 44 percent annual return on your investment. While you don't understand the complicated nature of the investment, several of your friends are investing money. You have an extra S5,000 that you earned last summer that you would like to invest. Should you invest your S5,000? Why or why not?

Answer 1

Answer:

No

Explanation:

An investment that "promises" a 44 percent annual return is most likely a scam, because even the riskiest stocks rarely yield annual returns higher than 10% of the initial investment.

Besides, the option is described as very complicated, and you as a potential investor do not understand it well, which is a very difficult position to be in because it could even lead you to being scammed without realizing.