Reference no: EM131043822
Reaching a financial goal
Erika and Kitty, who are twins, just received $45,000 each for their 27th birthdays. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year from today. Erika opened an account with the Safety First Bond Fund, a mutual fund that invests in high-quality bonds whose investors have earned 8% per year in the past. Kitty invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 14% per year in the fund's relatively short history.
If Erika's fund earns the same returns in the future as in the past, how old will she be when she becomes a millionaire? Round your answer to two decimal places.
years
If Kitty's fund earns the same returns in the future as in the past, how old will she be when she becomes a millionaire? Round your answer to two decimal places.
years
How large would Erika's annual contributions have to be for her to become a millionaire at the same age as Kitty, assuming their expected returns are realized? Round your answer to the nearest cent.
$
Is it rational or irrational for Erika to invest in the bond fund rather than in stocks?
High expected returns in the market are almost always accompanied by a lot of risk. We couldn't say whether Erika is rational or irrational, just that she seems to have less tolerance for risk than Kitty does.
High expected returns in the market are almost always accompanied by less risk. We couldn't say whether Erika is rational or irrational, just that she seems to have more tolerance for risk than Kitty does.
High expected returns in the market are almost always accompanied by a lot of risk. We couldn't say whether Erika is rational or irrational, just that she seems to have more tolerance for risk than Kitty does.
High expected returns in the market are almost always accompanied by less risk. We couldn't say whether Erika is rational or irrational, just that she seems to have less tolerance for risk than Kitty does.
High expected returns in the market are almost always accompanied by a lot of risk. We couldn't say whether Erika is rational or irrational, just that she seems to have about the same tolerance for risk than Kitty does.
Is this discount or a premium bond
: What is the price of a 6% coupon bond with 30 years left to maturity and a market interest rate of of 8.25%? is this discount or a premium bond? (hint: interest payments are semi-annual and fair value is $1000) please draw a time line and use a finan..
|
Do employees agree to develop job skills because of pay
: Many would argue that if an employee receives a decent salary, he or she will be satisfied and remain with the organization. What are your thoughts on this statement? Does compensation motivate behavior? Do people join a firm because of pay? Do peopl..
|
Understanding international compensation begins
: Understanding international compensation begins with the recognition of differences and similarities, along with figuring out how to best manage them. How people get paid around the world depends on variations. There are five contextual factors belie..
|
What is meant by ifrs and what is the convergence project
: What is meant by IFRS? What is the convergence project? What are some differences between IFRS and GAAP. Cite a specific area and clearly show how this area of accounting is different.
|
Reaching a financial goal
: Erika and Kitty, who are twins, just received $45,000 each for their 27th birthdays. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year f..
|
Write a paper about a us company involved in a tax inversion
: Write a 4 page paper about one of the following topics and include a bibliography. A U.S. company involved in a tax inversion. or EU claims concerning transfer price irregularities by Apple, Starbucks and Fiat.
|
What was the original purpose of rpg
: .What is an indicator?3.What trends emerged in the 1970s to influence the enhancements included in RPG 1lI?4.Give an example ofa synt"x error and a logic error in your native language (e.g., English)
|
Temperature for the month of august in philadelphia
: A meteorologist claims that the average high temperature for the month of August in Philadelphia, PA. is 83 degrees Fahrenheit. If the residents of Philadelphia do not believe this to be true, what hypotheses should they test?
|
Determine the appropriate rejection region
: A sample size of 150 is to be used to test the hypotheses H0: µ = 8.3 vs. Ha: µ ≠ 8.3 where µ is the true average weight of a newborn American baby. Determine the appropriate rejection region with a significance level of alpha = 0.05.
|