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About this lesson
 grade level: 6-8, 9-12
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curriculum standards:
2 10 12
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author: Patricia Bonner
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posted on: May 17, 2005
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Take a Risk on Investor Island (Part 3)

Key Economic Concepts:

Description:

The students analyze their personal level of risk tolerance in Part III of this three-part series. In a culminating activity, the students are given a hypothetical $5,000 to invest. They are asked to write a short essay telling how they would invest the $5,000 and explaining the factors that would influence their decision. The factors they must consider include their investment goals, risk, return and liquidity.

Lesson Objectives:

Students will:

  • Assess their personal risk tolerance.
  • Analyze options and make a decision how to invest a hypothetical $5,000.

Introduction:

parachute

Part 1 Part 2
Part 3

Tell the students that they will answer a series of questions intended to help them determine their personal levels of risk tolerance. They will then create a personal investment plan that takes into consideration their comfort with risk. Direct them to follow the instructions throughout the lesson and be prepared to answer the THINK ABOUT IT questions.

 

Resources:

 

  • Risk Taker Test
    An online flash interactive designed to assess your students' risk tolerance.
    Students are given a score between 40 and 100 (40 indicating a low risk-taker and 100 indicating a high risk-taker)
  • EconEdLink Assessment Rubrics
    Rubrics provided for assessing student contribution to the class discussion and the essay assignment.

Note:

This is the third lesson is a series of three lessons, please have your students complete Take a Risk on Investor Island (Part 1) and Take a Risk on Investor Island (Part II) before beginning Part III. Consider using this lesson (Part III) as the culmination of your study.

 

Process:

parachute manActivity 1: Are You a Risk Taker?

Have your students take the Risk Taker Test to assess their risk tolerance. If time allows, have the students line up in the classroom according to their risk tolerance score to see where they “stand” relative to their classmates.

THINK ABOUT IT

Ask students the following questions:

  • How would you describe your level of risk tolerance relative to that of other people?
  • Why do you think you are comfortable or uncomfortable with risk?

Activity 2: Create an Investment Plan

Tell the students that they have an imaginary $5,000 to invest. Direct them to write a short essay telling how they would invest their money and giving reasons for their choices. In deciding how they will invest, they should consider investment goals, return, risk and liquidity.

Responses will vary. For example:

  • Some will have a preference for income or growth.
  • Individuals who don't mind the roller coaster ride of markets prices will be more willing to put their money in riskier investments that may pay above-average returns. Those who want to avoid risk will prefer bonds and bond mutual funds.
  • Some students prefer mutual funds because of those funds are professionally managed. Others may prefer taking responsibility for the selection of specific investments, thus avoiding the fees charged by mutual funds.

Conclusion:

If you have not already done so, discuss student responses to the THINK ABOUT IT questions.

Ask several students to present their plans to the class. Discuss why their plans vary in terms of risk, return and liquidity.

Assessment Activity:

1. As part of Activity 2, have the students write a short essay telling how they would invest an imaginary $5,000 and giving reasons for their choices. Their explanations should discuss investment goals, return, risk and liquidity.

2. You may also assess the students' responses to questions in the THINK ABOUT IT section. These may be oral or written responses.

Rubrics are provided for assessing students' contributions to class discussions and the essay; adjust and weight the rubrics to fit your specific needs.

Part 1 Part 2
Part 3

Links Used:

Teacher Reviews

December 4, 2007
This is kind of hard, but it's a fun assignment. I like how it had the little island. That was fun.
- Holley Gordon  

December 12, 2007
This lesson was really fun. I normally did not like the online lessons as a student but this one was quite fun. I liked it! Thanks.
- Holly Gordon  Winder, GA

November 1, 2008
I found the interactive lesson to be quite enjoyable! As an author of a credit book, "Credit Crises Solutions - What Schools Don't Teach You About Credit Secrets Myths, and Facts," I learned a lot.
- Jade B.  Lake Mary , FL

October 22, 2009
What a cool awesome interesting hip edgy website!!
- Dean B  Da Screets, OH

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