| Code |
Description |
| SS.912.FL.6.1: | Explain the purpose of the following investments: stocks, bonds, mutual funds, index funds, and Exchange-Traded Funds (ETFs); real estate; money markets and annuities; and others (e.g., commodities).Clarifications:
Clarification 1: Instruction includes understanding that each investment has its own risk, and the consumer must decide whether the risk is worth the reward by examining available data. Clarification 2: Instruction includes discussing tax implications of each type of investment.
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| SS.912.FL.6.2: | Compare the ways that tax rates vary on different types of investments.Clarifications:
Clarification 1: Instruction includes understanding the after-tax rate of return of an investment. |
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| SS.912.FL.6.3: | Explain how the expenses of buying, selling, and holding financial assets decrease the rate of return from an investment.Clarifications:
Clarification 1: Instruction includes discussing costs and fees associated with different types of investments. These costs and fees may include, but are not limited to, management fees, commissions, and annual expense ratios. |
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| SS.912.FL.6.4: | Discuss that buyers and sellers in financial markets determine prices of financial assets and therefore influence the rates of return on those assets. |
| SS.912.FL.6.5: | Discuss the trade-off between risk and return in comparing financial investments.Clarifications:
Clarification 1: Instruction includes understanding that an investment with greater risk than another investment may have a lower market price, and therefore a higher rate of return, than the other investment. |
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| SS.912.FL.6.6: | Explain that shorter-term investments will likely have lower rates of return than longer-term investments. |
| SS.912.FL.6.7: | Describe how diversifying investments in different types of financial assets can lower investment risk.Clarifications:
Clarification 1: Instruction includes understanding why a financial advisor might encourage a client to include stocks, bonds, and real estate assets in his or her portfolio. |
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| SS.912.FL.6.8: | Describe how financial markets adjust to current events and financial news, and that prices in those markets reflect what is publicly known about those financial assets.Clarifications:
Clarification 1: Instruction includes how prices of financial investments can adjust when given specific news about a company’s or industry’s future profitability. |
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| SS.912.FL.6.9: | Discuss ways that prices of financial assets are affected by interest rates, changes in domestic and international economic conditions, monetary policy, and fiscal policy.Clarifications:
Clarification 1: Instruction includes understanding how a change in economic growth might change the value of a stock held by an investor. |
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| SS.912.FL.6.10: | Explain that people vary in their willingness to take risks because the willingness to take risks depends on factors such as personality, income, time horizon, and family situation.Clarifications:
Clarification 1: Instruction includes understanding how the portfolio of a retiree might differ from that of a young, single person. |
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| SS.912.FL.6.11: | Describe why an economic role for a government may exist if individuals do not have complete information about the nature of alternative investments or access to competitive financial markets.Clarifications:
Clarification 1: Instruction includes understanding why it is important for individuals to have accurate information about a company’s sales and profits when investing in that company. |
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| SS.912.FL.6.12: | Compare the Securities and Exchange Commission (SEC), the Federal Reserve, and other government agencies that regulate financial markets. |
| SS.912.FL.6.13: | Describe the purpose of the following accounts that hold investments: various retirement accounts (e.g., 401(k), 403(b), Traditional IRA, Roth IRA), education accounts (e.g., 529 savings plan, Coverdell Education Savings Account (ESA)), and taxable investment brokerage accounts.Clarifications:
Clarification 1: Instruction includes understanding that each account that holds an investment has its own risk, and the consumer must decide whether the risk is worth the reward. Clarification 2: Instruction includes analyzing the advantages and disadvantages of each account that holds an investment. Clarification 3: Instruction includes understanding various investment applications (mobile applications) that may be used to hold investment accounts.
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| SS.912.FL.6.14: | Evaluate the motives for using a digital currency.Clarifications:
Clarification 1: Instruction includes understanding the dollar price of a digital currency can be very volatile as it depends on the digital currency’s supply and demand. Clarification 2: Instruction includes understanding that a digital currency is a digital asset secured by cryptography and recorded on a block chain that may be used to send or receive payments on the internet. Clarification 3: Instruction includes understanding reasons for the use of digital currency: financial privacy concerns, international payments, the ability to execute smart contracts, and speculation.
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