SettingsYour daughter just gave birth to a baby. You are going to invest $20,000 to help pay for college. Your broker offers you two investment choices: (1) a portfolio of stocks that is expected to earn a growth rate of 9%; or (2) a portfolio of government bonds that will earn a rate of 5% per year. How much will be in the accountafter 10 years under each investment choice?(1) The amount in the account after 10 years, if invested in a portfolio of stocks, is $(Round to the nearest cent.)(2) The amount in the account after 10 years, if invested in a portfolio of government bonds, is $(Round to the nearest cent.)

The value under portfolio of stocks after 10 years will be $47,347.27 and value under portfolio of…

Answered: Settings Your daughter just gave birth…

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

Your broker has offered you an investment opportunity at a cost of $ 500. The opportunity offers $100 in 1 year, $200 in 2 years, and $300 in 3 years. If you require a 10% return on investments of similar risk, should you take the opportunity?
Please help me. Fast solution please Thankyou.
you want to go to Europe 4 years from now, and you can save $3300 per year, beginning one year from today. You plan to deposit the funds in a mutual fund that you think will retum 8.5% per year. Under these conditions, how much would you have in your account by the time you are ready for your trip? O a. $12, 344.53. b. $13,799.76 O c. $15, 765.34 O d. $11, 235.11 • e. $14,980.40
Your mother has asked you to help her with an investment. She has $6,000 to invest today for 3 years. You've identified a CD at a bank that pays a nominal rate of interest of 5.08%, with interest paid quarterly. What will be the value of this investment 3 years from now?
Suppose an investment will pay $7,000 in 44 years from now. If you can earn 6.15% interest compounded monthly by depositing your money in a bank, how much should you pay for the investment today?Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. Group of answer choices
David wants to invest $1,500,000 so that he will have an accumulated amount of at least $2,500,000 after some years. He has two choices of investment A and investment B. Investment A offers him an semi-annual simple interest rate of 10% while investment B offers him an effective annual interest rate of 8% convertible annually. Which investment will help him reach his goal faster? Approximate the time that each investment will reach his goal.
Marsha Stone is thinking about investing $10,000 for a period of 1 year, 1 year from now, in an interest bearing security. Jamila, at the bank, is assisting her in choosing the appropriate investment. She pulls up the current interest rate data on her computer and lets Marsha has a look at it. A review of interest rates reveals as follows: Current 1-year rate = 2% p.a.Current 2-year rate = 4% p.a. Both Jamila and Marsha are confused with the information because though the interest rates for one and 2 year investments are available, the interest rate for a 1-year investment that will commence one year from now, is not there to see. Imagine that you are Jamila’s supervisor. How can you help the two ladies out? How much money will Marsha end up with when her investment matures? Show relevant calculations to support your response.Assume that Pure Expectations theory is valid.
Chuck Tomkovick is planning to invest $24,000 today in a mutual fund that will provide a return of 9 percent each year. What will be the value of the investment in ten years? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.) Value of investment after 10 years $ _______________
Future value (with changing interest rates). Jose has $3,000 to invest for a 6-year period. He is looking at four different investment choices. What will be the value of his investment at the end of 6 years for each of the following potential investments? a. Bank CD at 3%. b. Bond fund at 7.5%. c. Mutual stock fund at 14%. d. New venture stock at 21%. a. What will be the value of Jose's bank CD investment that offers an annual rate of return of 3% for 6 years? (Round to the nearest cent.) $
Suppose that you have an opportunity to invest in a fund that pays 12% interest compoundedannually. Today, you invest P10,000 into this fund. Three years later, you borrow P5,000 from alocal bank at 10% effective annual interest and invest it in the fund. Two years later, you withdrawenough money from the fund to repay the bank loan and all interest due on it. Three years laterfrom this withdrawal you start taking P2,000 per year for 5 years out of the fund. After 5 years, youhave withdrawn your original P10,000. The amount remaining in the fund is earned interest. Howmuch remains?
you that will pay you $100,000 when you turn 25. If the relevant discount rate is 11 percent, how much is this fund worth today? (See Problem 3.) Calculating Rates of Return You've been offered an investment that will double your money in 12 years. What rate of return are you being offered? Check your answer using the Rule of 72. (See Problem 4.) 4.3 Calculatin
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