Advanced investing and higher risk
The path is primarily for ages 13–18 and adult beginners. Younger children can learn alongside a parent or teacher. Levels describe prior knowledge, not a guarantee of suitability for every age.
What you will learn
- Calculate the P/E for price 60 and earnings per share 3, and explain what we still do not know about the company.
- Explain why three technology funds are not necessarily three different sources of risk.
- Describe in your own words the concept and one of its risks.
Higher-risk topic: leverage, foreign exchange and crypto can cause substantial losses; some products can lose more than the initial amount. Learn percentages, risk and diversification first. This is education, not an invitation to trade.
Practice example
Price-to-Earnings (P/E): What is the price relative to earnings?
In a fictional company, the share price is 100 ₪ and the earnings per share in the year are 5 ₪: the P/E is 100 ÷ 5 = 20. If the price stays 100 and earnings fall to 2, the P/E rises to 50. This does not guarantee a return of the investment in 20 years.
Calculate the P/E for price 60 and earnings per share 3, and explain what we still do not know about the company.
Two funds: Did we really diversify?
Half the portfolio in Fund A which has 40% in a fictional company, and half in Fund B which has 20% in the same company. Total exposure to it is 50%×40% + 50%×20% = 30%.
Explain why three technology funds are not necessarily three different sources of risk.
Recommended sequence
- Price-to-Earnings (P/E): What is the price relative to earnings?
The price-to-earnings (P/E) ratio is the share price divided by earnings per share. It is a ratio, not a forecast and not a buy recommendation.
Level 7 · 5 minutes to read - Two funds: Did we really diversify?
Different funds can hold the same companies. Check cumulative exposure, not just the number of funds.
Level 7 · 5 minutes to read - Crypto: What Is Bitcoin?
A cryptographic asset is a digital asset that operates using cryptographic rules and a network of computers.
Level 7 · 3 minutes to read - Blockchain: why link blocks?
A blockchain is a digital log of records grouped into blocks linked by cryptographic fingerprints.
Level 7 · 4 minutes to read - Blockchain, Wallet and Private Key
A blockchain is the ledger shared by the network, and a wallet is a tool to manage access and actions on the network.
Level 7 · 3 minutes to read - A transaction’s journey: from wallet to block
A transaction is a signed request to change network state; sending it does not mean it is confirmed.
Level 7 · 4 minutes to read - How does the network agree? Mining and staking
A consensus mechanism lets computers agree on transaction order and valid history.
Level 7 · 4 minutes to read - Smart contracts: rules executed by code
A smart contract is a program on a blockchain that executes defined rules when invoked.
Level 7 · 4 minutes to read - Beyond coins: when is blockchain useful?
A shared ledger can help organizations coordinate information; it does not turn false data into truth.
Level 7 · 4 minutes to read - Crypto: Spotting Scams and Risk
Crypto safety includes keeping secrets, vetting services and understanding actions that are not easy to reverse.
Level 7 · 3 minutes to read - Leverage: losses grow too
Leverage is increasing exposure using debt or another mechanism.
Level 7 · 4 minutes to read - FOREX: Currency risk and leverage
Currency risk is a change in value because of an exchange rate movement. Leverage increases exposure relative to the money invested.
Level 7 · 4 minutes to read
Previous lesson
Businesses and complex debt