1. Lesson 8B: Evaluating Investment Options
Unit 8: Investing
Lesson 8B: Evaluating Investment Options
©2017, Minnesota Council on Economic Education. Developed in partnership with the Federal Reserve Bank of St. Louis.

2. How do people choose among investment options?
Compelling Question
How do people choose among investment options?
Lesson 8B

3. Visual 8B.1: Risk and Return Investment alternatives
Slide 1 of 4
Investment alternatives
CRITERIA
Rate of return
Risk
Liquidity
Costs
Cash
Checking accounts
Savings accounts
Money market deposit
accounts
Lesson 8B

4. Visual 8B.1: Risk and Return
Slide 2 of 4
Investment alternatives
CRITERIA
Rate of return
Risk
Liquidity
Costs
Certificates of deposit
U.S. savings bonds
Money market mutual funds
U.S. Treasury bonds
Lesson 8B

5. Visual 8B.1: Risk and Return Investment alternatives
Slide 3 of 4
Investment alternatives
CRITERIA
Rate of return
Risk
Liquidity
Costs
Corporate bonds
Income stocks
Growth stocks
Real estate
Lesson 8B

6. Visual 8B.1: Risk and Return Investment alternatives
Slide 4 of 4
Investment alternatives
CRITERIA
Rate of return
Risk
Liquidity
Costs
Commodities
Collectibles
Mutual funds
Lesson 8B

7. Visual 8B.1: Risk and ReturnAnswer Key
Slide 1 of 4
Investment alternatives
CRITERIA*
Rate of return
Risk
Liquidity
Costs
Cash  1 0% 2
Theft, inflation 5 1
None
Checking accounts
0-0.25%
Insured,
inflation
Fees
Savings accounts  2
0.25-1% 4
Maintenance
fees
Money market deposit accounts %
Min. balance required
NOTE: Rates of return are based on historical data. *1 = Very low, 2 = Low, 3 = Medium, 4 = High,
5 = Very high. Min., minimum.
Lesson 8B

8. Visual 8B.1: Risk and ReturnAnswer Key
Slide 2 of 4
Investment alternatives
CRITERIA*
Rate of return
Risk
Liquidity
Costs
Certificates of deposit  3
4-5% 1
Insured 3 2
Transaction,
access fees
U.S. savings bonds
2-4%
Govt. guaranteed**
Money market mutual funds
4.5-5%
Not insured
other fees
U.S. Treasury bonds %
NOTE: Rates of return are based on historical data. *1 = Very Low, 2 = Low, 3 = Medium, 4 = High,
5 = Very High. ** Backed by the full faith and credit of the U.S. Government.
Lesson 8B

9. Visual 8B.1: Risk and ReturnAnswer Key Investment alternatives
Slide 3 of 4
Investment alternatives
CRITERIA*
Rate of return
Risk
Liquidity
Costs
Corporate bonds
 3-4
6-10%
2-4
Company rating 3
Broker, trans.
fees
Income stocks  4
9-11%
3-4
Company rating/market
Growth stocks
 4-5
12-15%
4-5
Real estate
Varies
Market 2 4
Agent, trans. fees
NOTE: Rates of return are based on historical data. *1 = Very Low, 2 = Low, 3 = Medium, 4 = High,
5 = Very High. Trans.; transaction.
Lesson 8B

10. Visual 8B.1: Risk and ReturnAnswer Key Investment alternatives
Slide 4 of 4
Investment alternatives
CRITERIA*
Rate of return
Risk
Liquidity
Costs
Commodities  4
Varies
4-5
Market 3
Broker, trans.
fees
Collectibles
 1-5 1 4
Trans. fees
Mutual Funds
 2-4
2-4
Mix dependent
3-5
Management fees
NOTE: Rates of return are based on historical data. *1 = Very low, 2 = Low, 3 = Medium, 4 = High, 5 = Very high. Trans.; transaction.
Lesson 8B