Future value of a portfolio. Rachel and Richard want to know when their current portfolio will be sufficient for them to retire. They have the following balances in their portfolio: Money market account (MM): $37,000 Government bond mutual fund (GB): $145,000 Large capital mutual fund (LC): $105,000 Small capital mutual fund (SC): $74,000 Real estate trust fund (RE): $85,000 Rachel and Richard believe they need at least $1,700,000 to retire. The money market account grows at 2.5% annually the government bond mutual fund grows at 5.0% annually, the large capital mutual fund grows at 9.5% annually, the small capital mutual fund grows at 14.0% annually, and the real estate trust fund grows at 3.0% annually. With the assumption that no more funds will be deposited into any of these accounts, how long will it be until they reach the $1,700,000 goal? Rachel and Richard will need to invest their accounts for whole number.) or more years to reach $1,700,000. (Round to the nearest

Future value of a portfolio. Rachel and Richard want to know when their current portfolio will be sufficient for them to retire. They have the following balances in their portfolio: Money market account (MM): $37,000 Government bond mutual fund (GB): $145,000 Large capital mutual fund (LC): $105,000 Small capital mutual fund (SC): $74,000 Real estate trust fund (RE): $85,000 Rachel and Richard believe they need at least $1,700,000 to retire. The money market account grows at 2.5% annually the government bond mutual fund grows at 5.0% annually, the large capital mutual fund grows at 9.5% annually, the small capital mutual fund grows at 14.0% annually, and the real estate trust fund grows at 3.0% annually. With the assumption that no more funds will be deposited into any of these accounts, how long will it be until they reach the $1,700,000 goal? Rachel and Richard will need to invest their accounts for whole number.) or more years to reach $1,700,000. (Round to the nearest

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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Mike and Emily each have invested $100, 000 in an investment account. No other contributions will be made to their investment account. Both have the sarne goal; they each want their account to reach $3,000,000 at which time each will retire. Mike has his money invested in risk free securities with an expected return of 12% compounded monthly. Emily has her money invested in a stock fund with an expected return of 15% compounded quarterly. How many years after Emily retires will Mike retire?
The three brathers inherited the money from their late father. The youngest and middle son decided to put their money in the bank, The eldest son also considered the possibility of other ways of investing, such as in precious metals, securities or buying an investment apartment. He considered these options in the context of the future economic situation (improvement, no change, deterioration, decline) and percentage returns from individual investment options. He described the decision problem using the following table with estimates of the size of revenues. Use the EMV criteria to determine the most appropriate way to invest your eldest son. Preferences 0.052 0.2 0.056 0.692 Improvement no change deterioration decline precious metals 16.375 16 15.625 14.875 securities 10 10 8.25 0 investment apartment 6.75 1.75 1 1 Now write what is the best expected return (EMV)?
11. Adam and Kendra, both aged 30, are married and recently purchased their first home. They have a 250,000 mortgage on this home with a 25year amortization. They meet with Nick, a licensed insurance agent to go over coverage options. From this information what type of policy best suits Adam and Kendra's needs? A term policy that would become payable only atter both Adam and Kendra pass wway. A term policy that would become payable if either Adam or Kendra pass away. Two separate term policies with elther one insuting Adam or Kendra A whole life policy that would become payable if either Adam of Kendra pass away.
Suppose you are 28 and married. You and your spouse file for income taxes jointly. You are in the 25% tax bracket. You are considering a few personal investment issues. Suppose you expect a significant career or family change in three years, which requires substantial initial capital commitment (e.g., starting your own business, relocating abroad, buying a house, children going to college, etc.). Which of the following seems to be the most appropriate investment strategy? a.Take a loan to buy an investment condo. b.Use your savings to buy a small number of stocks that you believe to rise in price. c.Use your savings to buy well-diversified stock mutual fund shares. d.Use your savings to buy well-diversified bond mutual fund shares.
Henrietta Marston plans to retire in the year 2050. She is considering a fund that will be more risk-oriented now and become increasingly conservative as she approaches retirement. Which of the following funds would you recommend to her? A) Regional fund B) Equity income fund OC) Sector fund OD) Fund of funds E) Life-cycle fund
Assume the role of a financial advisor. You have 3 new clients. Each of them came to you with $100,000 to invest. You suggest to each other them to put the money into mutual funds. What mutual funds do you suggest for each client and why. Support your recommendations. Jose - 29 Years of Age. Working. Makes $250,000 a year. Married. No kids. No immediate need for cash. Investing Risk Tolerance = High. Cynthia - 49. Single. 3 kids. Working. Makes a modest annual income. Ages 13, 15, 17. All kids plan to attend college. Plans to use some of this money to help pay for college tuition. Investing Risk Tolerance = Moderate. Jackie - 80. Retired. Receives a modest retirement income. Needs money to help pay monthly expenses. She is healthy. She also has three older siblings in their 90's. Investing Risk Tolerance Low.
27) Albreit Doghut, a portfolio manager of the Danielson Financial Group meets with Kristina Teqward, a client, to discuss investments objectives and constraints to be reflected in an Investment Policy statement. Albreit Doghut established that Kristina Teqward: pursues a long, comfortable retirement where she seeks to have little compromise in her lifestyle or concerns regarding her financial future plans to retire from her job in 10 years, after which this portfolio will be her primary source of income given that annual pension is expected to be relatively low. all capital gains are taxed at 20% and ordinary income - at 30%. To complete the assessment of investment constraints, Albreit Doghut still needs to inquire about Kristina Teqward's: Select one or more: tax concerns unique needs time horizon liquidity needs
A ROTH IRA or 401(k) allows you to take money out tax free, and thank your Professor for telling you to open, and fund this type of investment! O True O False
Array intends to allocate her savings into various types of financial investments. She has $184,100 to invest in stocks, bonds, and mutual funds according to her chosen 10 2 10 ratio 779 investment? Round your answers to the nearest dollar. Stocks: $ Bonds: $ respectively. How much should she invest in each type of Mutual Funds: $
Related to Checkpoint 5.5) (Solving for n) Jack asked Jill to marry him, and she has accepted under one condition: Jack must buy her a new $300,000 Rolls-Royce Phantom. Jack currently has $50,900 that he may invest. He has found a mutual fund with an expected annual return of 4.5 percent in which he will place the money. How long will it take Jack to win Jill's hand in marriage? Ignore taxes and inflation.
Frank Zanca is considering three different investments that his broker has offered to him. The different cash flows are as follows: End of Year A 1 $300 B C $400 2 $300 3 $300 4 $300 $300 $600 5 $300 6 $300 $300 $300 $600 7 8 Because Frank only has enough savings for one investment, his broker has proposed alternative C to be, according to his expertise, "the best in town." However, Frank questions his broker. Calculate the present value of each investment, assuming a 15% discount rate. Which is Frank's best alternative? Select one: a. Investment A O b. Investment B c. Investment C O d. He should not invest in any of the suggested investments O e. All of the investments are equally good

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