📊 Part 1: Understanding Investment Risks

1. What is the main risk associated with collective investment schemes?

a) The value of investments can go down as well as up

b) You will always lose money

c) They are illegal in the UK

d) There are no risks involved

2. Which of these are types of investment risk? (Select all that apply)

Market risk

Inflation risk

Currency risk

Guaranteed profit risk

3. What does "diversification" mean in investment terms?

a) Putting all money in one investment

b) Spreading investments across different assets

c) Only investing in UK companies

d) Avoiding all investments

4. Fill in the blank: Past performance is _________ a guarantee of future results.

Answer: _________________

💭 Part 2: Scenario Analysis

5. Sarah invests £1,000 in a unit trust. After one year, her investment is worth £850. What has happened?

6. Explain why collective investment schemes might be considered less risky than buying individual company shares.

7. List three factors that could cause the value of a collective investment to fall.

1. _________________________________

2. _________________________________

3. _________________________________

8. A friend says "Investment funds are completely safe because they're managed by professionals." Do you agree? Explain your answer.

9. Match each risk type to its definition:

Market Risk

Inflation Risk

Liquidity Risk

Difficulty selling investments quickly

Overall market values falling

Money losing purchasing power over time

10. Extension Activity: Research and explain one strategy investors can use to manage investment risk.