This chapter covered the basics of the four main types of financial assets: stocks, bonds, futures, and options. In addition to discussing basic features, we alerted you to some of the risks associated with these instruments. We particularly stressed the large potential gains and losses possible with derivative assets. How should you, as an investor or investment manager, put this information to work?

      Following up on our previous chapter, you need to execute each of the possible transaction types suggested by this chapter in a simulated brokerage account. Your goal is to experience some of the large gains (and losses) to understand them on a personal level. Try to do at least the following:

1. Buy a corporate or government bond.
2. Buy agriculture, natural resource, and financial futures contracts.
3. Sell agriculture, natural resource, and financial futures contracts.
4. Buy put and call option contracts.
5. Sell put and call option contracts.

      In each case, once you have created the position, be sure to monitor it regularly by checking prices, trading activity, and relevant news using The Wall Street Journal or an online information service to understand why it changes in value.

      One thing you will discover if you execute these trades is that some of these investments carry relatively low risk and some carry relatively high risk. Which are which? Under what circumstances is each of these investments appropriate? We will have more to say about these investments later, but you'll get a lot more out of our discussion (and have some fun stories to tell) if you already have some personal experience. As always, it's better to become educated about these things with play money before you commit real money.