Question 2:
You are offered a special investment opportunity with a guaranteed rate of return of 12% a year for a one year period. Should you consider this investment?
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CORRECT!
Currently, guaranteed investments such as GICs and Canada Savings bonds generally provide a rate of return of less than 1% a year for one year terms. This means that it is unlikely for an investment to be guaranteed and to provide a 12% return because the risk of the product (which is essentially zero since it is guaranteed) does not correspond to the high rate of return of 12%.Remember, if it sounds too good to be true, it probably is!
