Very early in the morning (12:01am) on January 1, you are celebrating your classmate’s 23rd birthday. She asks for your advice about investing. 1. Assume the U.S. stock market appreciates 8.1% each year. The passively managed Fidelity ZERO Total Market Index (ticker: FZROX) charges no fees, so an investor receives 100% of the market’s return. How much should she invest in FZROX on Dec31 at 11:59pm each year (for a total of 42 investments) so she would have $10mm when she turns 65? 2. Instead of investing the same amount at the end of each year, she increases her investments 4% each year in FZROX. How large should her first investment be (minutes before she turns 24
Very early in the morning (12:01am) on January 1, you are celebrating your classmate’s 23rd birthday. She asks for your advice about investing. 1. Assume the U.S. stock market appreciates 8.1% each year. The passively managed Fidelity ZERO Total Market Index (ticker: FZROX) charges no fees, so an investor receives 100% of the market’s return. How much should she invest in FZROX on Dec31 at 11:59pm each year (for a total of 42 investments) so she would have $10mm when she turns 65? 2. Instead of investing the same amount at the end of each year, she increases her investments 4% each year in FZROX. How large should her first investment be (minutes before she turns 24
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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Very early in the morning (12:01am) on January 1, you are celebrating your classmate’s 23rd birthday. She asks for your advice about investing.
1. Assume the U.S. stock market appreciates 8.1% each year. The passively managed Fidelity ZERO Total Market Index (ticker: FZROX) charges no fees, so an investor receives 100% of the market’s return. How much should she invest in FZROX on Dec31 at 11:59pm each year (for a total of 42 investments) so she would have $10mm when she turns 65?
2. Instead of investing the same amount at the end of each year, she increases her investments 4% each year in FZROX. How large should her first investment be (minutes before she turns 24)?
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