Week 03, Class 10
Risk, Returns and Interest Rates
Invest, compare and plan your financial future
Every investment advertisement mentions return. Few mention risk, and almost none mention the interest rate quietly steering both. This class puts the three in one frame.
Students examine the relationship between risk and potential return, then watch how a change in interest rates alters the cost of borrowing and the reward of saving. The same purchase, priced at two different rates, becomes two different decisions.
Topics covered
- Risk and potential returns
- The risk-return tradeoff
- How interest rates change borrowing costs
- How interest rates change saving returns
- Reading a rate before deciding
The practical activity
Students evaluate the same hypothetical purchase at two different interest rates and explain how the rate changes the decision.
The learning outcome
Students can explain how risk, potential returns and interest rates influence a financial decision.