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Assume that you are setting up your retirement plan by considering two investment plans together. (Your retirement in 20 years). You want to earn a total of $1,000,000 after 20 years from the following two investment plans together. Investment plan
1: You currently have $20,000 in the bank and decide to invest that $20,000 in a money market account for 20 years which you feel will generate a return on 6% per year. Investment plan
2: You also intend on investing additional money at the end of each year for 20 years in a stock market mutual fund that you believe will return 10% per year.
In your investment plan 2, if you make 20 equal annual investments at the end of each year for 20 years into the stock market mutual fund, how much will you need to invest each year in order to have a total of $1,000,000 from both investment plans after 20 years? (Total of $1,000,000 is the sum of your two investment outcomes after 20 years)
Stock A has a beta of 1.2 and a standard deviation of returns of 14%. Stock B has a beta of 1.8 and a standard deviation of returns of 18%. If the risk free rate of return increases and the market risk premium remains constant, then _________
Explain how you would create a synthetic stock position and identify the cost. Suppose you observe a $100 stock price, identify any arbitrage opportunities.
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Cooley Landscaping Company needs to borrow ?$25 comma 000 for a new? front-end dirt loader. The bank is willing to loan the funds at 7.5 ?% interest with annual payments at the end of the year for the next 10 years. What is the annual payment on this..
Bubba's Steakhouse has budgeted the following costs for a month in which 1,690 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,510; depreciation, $690; and other fixed costs, $420. Each st..
A local bank advertises the following deal: Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever. Calculate the present value of your payments to the bank if the intere..
The state of Alabama has legally earmarked around 85 percent of its state budget.
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