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Essentials Of Investments
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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3) The US Stock market has shown a historical rate of return of 8% annual growth compounded continuously. Assume this fact to answer the following. a. What is the future value of a $10,000 investment in the US Stock market after 40 years? b. If Tom invests $1000 into the US Stock Market today, what will be the rate of change of Tom's investment 10 years from now? c. Nancy has a new grandchild and would like to make an investment for the child's future retirement. Assuming Nancy can invest in the US Stock Market with 8% interest continuously compounded, how much money must she invest now so that her grandchild has 1 MILLION DOLLARS in 60 years?
Transcribed Image Text:3) The US Stock market has shown a historical rate of return of 8% annual growth compounded continuously. Assume this fact to answer the following. a. What is the future value of a $10,000 investment in the US Stock market after 40 years? b. If Tom invests $1000 into the US Stock Market today, what will be the rate of change of Tom's investment 10 years from now? c. Nancy has a new grandchild and would like to make an investment for the child's future retirement. Assuming Nancy can invest in the US Stock Market with 8% interest continuously compounded, how much money must she invest now so that her grandchild has 1 MILLION DOLLARS in 60 years?
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