Alex Moore is 43 years old and has accumulated $78,000 in his self-directed defined contribution pension plan. Each year he contributes $1,500 to the plan, and his employer contributes an equal amount. Alex thinks he will retire at age 60 and figures he will live to age 83. The plan allows for two types of investments. One offers a 4% risk-free real rate of return. The other offers an expected return of 10% and has a standard deviation of 34% Alex now has 40% of his money in the risk free Investment and 60% in the risky investment. He plans to continue saving at the same rate and keep the same proportions invested in each of the investments His salary will grow at the same rate as inflation. of the total amount of new funds that will be invested by Alex and by his employer on his behalf, how much will he put into the safe account each year, how much into the risky account? Mumple Choice $1.500 $1.500 $1,200 $1,800 $2.000, $1,000

Alex Moore is 43 years old and has accumulated $78,000 in his self-directed defined contribution pension plan. Each year he contributes $1,500 to the plan, and his employer contributes an equal amount. Alex thinks he will retire at age 60 and figures he will live to age 83. The plan allows for two types of investments. One offers a 4% risk-free real rate of return. The other offers an expected return of 10% and has a standard deviation of 34% Alex now has 40% of his money in the risk free Investment and 60% in the risky investment. He plans to continue saving at the same rate and keep the same proportions invested in each of the investments His salary will grow at the same rate as inflation. of the total amount of new funds that will be invested by Alex and by his employer on his behalf, how much will he put into the safe account each year, how much into the risky account? Mumple Choice $1.500 $1.500 $1,200 $1,800 $2.000, $1,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

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A woman is planning for retirement in 30 years and decides she can deposit $6,000 each year on December 31 into a retirement savings plan that she expects will pay 6% interest. In 20 years she also expects to receive a small inheritance of $12,000 that she can also put into her retirement fund. The woman anticipates that her retirement fund will need to last 20 years; she estimates that she will need $60,000 at the end of each year in retirement to cover her living expenses. Her plan is flawed. How much extra does she need to save every year (rounded to dollars and cents) to achieve her goals? (Do not round interim calculations)
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