You are going to invest in a stock mutual fund with a front-end load of 5.5 percent and an expense ratio of 1.41 percent. You also can invest in a money market mutual fund with a return of 2.5 percent and an expense ratio of 0.40 percent. If you plan to keep your investment for 2 years, what annual return must the stock mutual fund earn to exceed an investment in the money market fund? What if your investment horizon is 10 years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

You are going to invest in a stock mutual fund with a front-end load of 5.5 percent and an expense ratio of 1.41 percent. You also can invest in a money market mutual fund with a return of 2.5 percent and an expense ratio of 0.40 percent. If you plan to keep your investment for 2 years, what annual return must the stock mutual fund earn to exceed an investment in the money market fund? What if your investment horizon is 10 years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

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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The Maybe Pay Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $141,221 per year forever with the first payment coming in 9 years. Assume the required return on this investment is 12.16%. How much will you pay for the policy?
You have invested P100,000 in a mutual fund that promises to pay 8% each year. You will keep this for 10 years and then cash out the total value. The cost to close the mutual fund account by then is expected to be P5,000. If your minimum return from this investment is 7%, compute for your cost of illiquity with regard to the investment.
Chuck Tomkovick is planning to invest $25,000 today in a mutual fund that will provide return of 8% each year. What will be the value of the investment in 10 years?
You are going to invest $1,500 today in a fund today. After 10 years, you want to have exactly $2,500 in the fund. If the interest rate is compounded annually, what interest rate is needed to achieve this?
You are going to invest in a stock mutual fund with a front-end load of 6 percent and an expense ratio of 1.39 percent. You also can invest in a money market mutual fund with a return of 2.6 percent and an expense ratio of 0.10 percent. If you plan to keep your investment for 2 years, what annual return must the stock mutual fund earn to exceed an investment in the money market fund? What if your investment horizon is 9 years? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. 2 Years 9 Years Annual Return % %
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 $ _______________
You manage a pension fund that will provide retired workers with lifetime annuities. You determine that the payouts of the fund are (approximately) level perpetuities of $1 million per year. The interest rate is 10%. You plan to fully fund the obligation using 5-year maturity and 20-year maturity zero-coupon bonds. How much market value of each of the zeros will be necessary to fund the plan if you desire an immunized position? 4 million for 5 year bond and 6 million of 20-year bond. 6 million for 5 year bond and 4 million of 20-year bond. O 6.67 million for 5 year bond and 3.33 million of 20-year bond. O 3.33 million for 5 year bond and 6.67 million of 20-year bond. Question 9 Using the same information from question 8, suppose that one year has passed, and the interest rate remains at 10%. What actions are required to rebalance the portfolio? O buy additional 0.67 million 5-year bond and sell 0.67 million 20-year bond. Sell 0.67 million 5-year bond, purchase additional 0.67 million…
Suppose you invest $5,000 into a mutual fund that is expected to earn a rate of return of 7%. The amount of money you will have in 10 years is closest to which of the following? The amount you will have in 25Lyears is closest to which of the following? O 1) $53,500; $802,500 O 2) $2,552.56; $3,257.79 O 3) $9,835.76; $27,137.16 O 4) $3,138; $ 1,311,892 5) None of the answers are correct
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.) $
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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