INVESTMENTS OR GOLF?
Response to the following problem:
Justin Read and Judi Todd, senior accounting students at a large university, have been good friends since high school. Each has already found a job that will begin after they graduate. Justin has accepted a position as an internal auditor in a medium-size manufacturing company. Judi will be working for one of the major public accounting companies. Each is looking forward to the challenge of a new career and to the prospect of achieving success both professionally and financially. Justin and Judi are preparing to enrol for their final semester. Each has one free elective to select. Justin is considering taking a golf course offered by the physical education department, which he says will help him socialise in his business career. Judi is planning to take a basic investments course. She has been trying to convince Justin to take investments instead of golf. Justin believes he doesn't need to take investments because he already knows what ordinary shares are. He believes that whenever he has accumulated excess funds, he can invest in the shares of a company that is doing well. Judi argues that there is much more to it than simply choosing ordinary shares. She feels that exposure to the field of investments would be more beneficial than learning how to play golf.
QUESTIONS
1. Explain to Justin the structure of the investment process and the economic importance of investing.
2. List and discuss the other types of investment vehicles with which Justin is apparently unfamiliar.
3. Assuming that Justin already gets plenty of exercise, what arguments would you give to convince him to take investments rather than golf?