You saved $20,000.00 and want to diversify your monies. You invest 45% in a Treasury bond for 3 years at 4.35% APR compounded annually. You place 15% in a CD at 3.75% APR for 3 years compounded annually. 20% you invest in a stock plan and the remainder is in a savings account at 2.90% APR compounded annually. The stock plan increases 8% the first year, decreases in value by 4% the second year, and increases by 6% the third year. 1. What are the balances for each type of investment at the end of the third year? 2. What is your total gain from all of the investments combined? 3. If you had invested 45% in stock and 20% in Treasury bonds, would you have more or less of a gain after the three years?
You saved $20,000.00 and want to diversify your monies. You invest 45% in a Treasury bond for 3 years at 4.35% APR compounded annually. You place 15% in a CD at 3.75% APR for 3 years compounded annually. 20% you invest in a stock plan and the remainder is in a savings account at 2.90% APR compounded annually. The stock plan increases 8% the first year, decreases in value by 4% the second year, and increases by 6% the third year. 1. What are the balances for each type of investment at the end of the third year? 2. What is your total gain from all of the investments combined? 3. If you had invested 45% in stock and 20% in Treasury bonds, would you have more or less of a gain after the three years?
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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Transcribed Image Text:You saved $20,000.00 and want to diversify your monies. You invest 45% in a Treasury bond for 3 years at 4.35% APR compounded annually. You
place 15% in a CD at 3.75% APR for 3 years compounded annually. 20% you invest in a stock plan and the remainder is in a savings account at
2.90% APR compounded annually. The stock plan increases 8% the first year, decreases in value by 4% the second year, and increases by 6% the
third year.
1. What are the balances for each type of investment at the end of the third year?
2. What is your total gain from all of the investments combined?
3. If you had invested 45% in stock and 20% in Treasury bonds, would you have more or less of a gain after the three years?
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