Henrietta Marston plans to retire in the year 2050. She is considering a fund that willbe more risk-oriented now and become increasingly conservative as she approachesretirement. Which of the following funds would you recommend to her?A) Regional fundB) Equity income fundOC) Sector fundOD) Fund of fundsE) Life-cycle fund

Retirement planning is the act of setting financial goals and making strategic decisions to ensure a…

Answered: retirement. Which of the following…

retirement. Which of the following funds would you recommend to her? A) Regional fund OB) Equity income fund OC) Sector fund OD) Fund of funds E) Life-cycle fund

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter15: Mutual And Exchange Traded Funds

Section: Chapter Questions

Problem 6FPC

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Anita is looking forward to her retirement which is only five years away. Her retirement account did not accumulate as much as she had hoped. She decided to make some changes in her financial planning. Based on this information, which of the following statements is correct? At this stage, Anita should rebalance her funds in a way that maximizes her investment in growth stocks to accelerate her fund balance. At this stage, Anita should focus on preserving what she has accumulated and minimize all debt obligations. At this stage, Anita should borrow as much as possible and plan on making the payments with her social security earnings. At this stage, Anita should plan on extending her career, going on a diet, moving in with her children, and eliminating all recreational activities.
Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and co-directors of the company’s pension fund management division. An important new client, the North-Western Municipal Alliance, has requested that Mutual of Seattle present an investment seminar to the mayors of the represented cities, and Strother and Tibbs, who will make the actual presentation. C) How does one determine the value of any asset whose value is based on expected future cash flows? D)How is the value of a bond determined? What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required rate of return is 10%? E) What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?
(Expected rate of return) James Fromholtz is considering whether to invest in a newly formed investment fund. The fund's investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the fund's performance will hinge on how the national economy performs in the coming year. Specifically, he suggested the following possible outcomes: LOADING... . a. Based on these potential outcomes, what is your estimate of the expected rate of return from this investment opportunity? b. Would you be interested in making such an investment? Note that you lose all your money in one year if the economy collapses into the worst state or you double your money if the economy enters into a rapid expansion. State of Economy Probability Fund Returns Rapid expansion and recovery 15% 100% Modest growth 35% 30% Continued recession 35% 10% Falls into depression 15% −100%