After thinking about things for a while Sam and Judy have decided to rent and try...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
After thinking about things for a while Sam and Judy have decided to rent and try to come up with an even bigger down payment. Their parents have made the $45,000 available to them right away and they want to invest in both stocks and bonds. Actually, they will probably buy mutual funds but the fund will return the same gains that individual securities will. They have done some research and have discovered that over time bond funds return about 5% per year and stock funds return about 9% per year. Your assignment should include the following: 1.) Your guess at what kind of risk tolerance Sam and Judy have. You can make your guess based on the material and recommendations in our earlier presentations. Make sure your presentation includes your rational. 2.) Your suggestions for an asset allocation for their investments, meaning what percentage of their money they should invest in bonds and what percentage should they invest in stocks. 3.) Based on their asset allocation how much do you think that they will have for a down payment in five years? Use the Future Value method to determine how much they will have. Make sure that you show all of your work in calculating what they will have. After thinking about things for a while Sam and Judy have decided to rent and try to come up with an even bigger down payment. Their parents have made the $45,000 available to them right away and they want to invest in both stocks and bonds. Actually, they will probably buy mutual funds but the fund will return the same gains that individual securities will. They have done some research and have discovered that over time bond funds return about 5% per year and stock funds return about 9% per year. Your assignment should include the following: 1.) Your guess at what kind of risk tolerance Sam and Judy have. You can make your guess based on the material and recommendations in our earlier presentations. Make sure your presentation includes your rational. 2.) Your suggestions for an asset allocation for their investments, meaning what percentage of their money they should invest in bonds and what percentage should they invest in stocks. 3.) Based on their asset allocation how much do you think that they will have for a down payment in five years? Use the Future Value method to determine how much they will have. Make sure that you show all of your work in calculating what they will have.
Expert Answer:
Answer rating: 100% (QA)
Sam Judy have high risk tolerance since they expect to earn returns by investing in mutual fu... View the full answer
Related Book For
Research Methods for Business A Skill Building Approach
ISBN: 978-1119942252
6th edition
Authors: Uma Sekaran, Roger Bougie
Posted Date:
Students also viewed these accounting questions
-
Try to come up with two unidimensional and two multidimensional abstract concepts. Explain why these concepts have either one or more than one dimension.
-
Come up with an explanation as to why radiation is easily blocked by materials such as a piece of wood, whereas radiation easily passes through those same materials.
-
For a forecasting problem, come up with an unique business idea. Discuss the business idea and its financial projections (Including Sales, COGS, other expenses, assets) for three years in two pages....
-
What are the essential differences between victim and annex caches?
-
Let X be a random variable with pdf f(x) = ax2 + b, 0 x 1. Find a and b such that E(X) =5/8.
-
A thin \(0.100 \mathrm{~kg}\) rod that is \(250 \mathrm{~mm}\) long has a small hole drilled through it \(62.5 \mathrm{~mm}\) from one end. A metal wire is strung through the hole and fixed...
-
For a given x-value, the point estimate for a 95% confidence interval for the mean response is the same as the one for the 95% prediction interval. In Exercises 5 and 6, determine whether the...
-
A specimen of medium-carbon steel having an initial diameter of 0.503 in was tested in tension using a gauge length of 2 in. The following data were obtained for the elastic and plastic states: Note...
-
Please find the following derivative a) f(t)=sin(t)
-
Calculate some of the standard customer acquisition costs across different types of channels: (conversion rate means the percentage of people who purchased the item among all the people who watched...
-
Charles operates a sole proprietorship using the cash method. This year Charles paid $6,400 to the bank for 12 months of interest accruing on a business loan from July 1st of this year through June...
-
Riley, Inc., a calendar year firm, buys equipment, signing a 3 year, $750,000, non-interest bearing note, on 9/30/20A.The equipment has a fair value at signing of $629,715.Please provide the entry...
-
Lazer Inc. reported the following information. Item Amount Inventory, Dec. 31, Year 1 $97,200 Inventory, Dec. 31, Year 2 102,800 Cost of goods sold, Year 1 576,000 Cost of goods sold, Year 2 600,000...
-
Should employers have access to employees' email or Internet surfing history? Should businesses adopt privacy policies for employees or customers or both, and if so, how should these policies be...
-
A revalued PPE asset had an Asset Revaluation Surplus ( ARS ) balance of $ 5 6 0 0 0 . This item of PPE was sold for $ 8 7 9 0 0 0 . Prepare the necessary journal entry to deal with the ARS balance
-
Applecross Dental Services is investigating expanding its operations by acquiring additional teeth cleaning equipment. The equipment would cost $155,000 and management has estimated that it would...
-
Sunspot Beverages, Limited, of Fiji uses the weighted-average method in its process costing system. It makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits...
-
Write a while loop that uses an explicit iterator to accomplish the same thing as Exercise 7.3. Exercise 7.3. Write a for-each loop that calls the addInterest method on each BankAccount object in a...
-
Use of a sample of 5,000 is not necessarily better than having a sample of 500. How would you react to this statement?
-
A foreman thinks that the low efficiency of the machine tool operators is directly linked to the high level of fumes emitted in the workshop. He would like to prove this to his supervisor through a...
-
Every data-collection method has its own built-in biases. Therefore, resorting to multi-methods of data collection is only going to compound the biases. Critique this statement.
-
Analyzing expense transactions Examine the following transactions and identify those that create expenses for Valdez Services. Use debitcredit rules to record the transactions that create expenses....
-
Preparing a balance sheet Refer to the T-accounts in Exercise 3-7. Compute ending balances and prepare Belle Companys balance sheet. Assume the balance sheet is dated December 31, 2007. (Its December...
-
Analyzing revenue transactions Examine the following transactions and identify those that create revenues for Valdez Services, a company owned by Brina Valdez. Use debit-credit rules to record the...
Study smarter with the SolutionInn App