Your friend deposits $10,000 in an account today in hope that it grows to $14,250 in 5
Question:
Your friend deposits $10,000 in an account today in hope that it grows to $14,250 in 5 years.What annual compounded rate would she need to earn?
(B) Suppose your friend then realizes she can expect to earn 9% APR compounded monthly in another investment vehicle.If she earns interest at that rate, how manyyearswould it take to realize the above $14,250 goal?
2.Next month, your friend plans to deposit $1,000 into an account expected to earn 12% APR compounded monthly.After the first $1,000 deposit, she will constantly grow the deposit by 0.5% each month.Given the above plan, how much will she have saved in 4 years?
3.(A) What is the yield to maturity on a corporate bond given the following information:
- bond matures in 20 years
- coupon rate = 8% APR compounded semi-annually, paid semi-annually
- face value = $1000
- bond price = $882.91
(B) In our class, we discussed two types of risks faced by bondholders.What are these two risks, and how could bond investors lower or eliminate each type of risk?
Personal Finance Turning Money into Wealth
ISBN: 978-0134730363
8th edition
Authors: Arthur J. Keown