Amanda (aged 28) and Bill (aged 30) have just got married.  They both have full time jobs, have no children and are saving for the deposit to buy a condo.  Their goal is to save a deposit 7 years from now.  They currently have no debts but also no savings.  They will start saving by contributing $5,000 at the end of the year for the next 7 years to reach their goal.  After talking to someone who did ADMS 2541, they have decided to invest in an equity fund.  The couple will choose between two different options: a Keele index fund or Steele ETF.  Both funds invest in the top 200 companies listed on the Toronto Stock Exchange.  

Item	Keele Index fund	Steele ETF
Expected return	6% p.a.	6% p.a.
Management Expense Ratio (MER)	1% p.a.	0.2%
Commissions paid on each trade	0	$15

TASKS:

1) Explain to Amanda and Bill the process of investing in the Keele index fund AND the process of investing in the Steele ETF. (4 marks)

2) Explain the major benefit of investing in an index fund/ETF instead of purchasing individual shares. (4 marks)

3) Using the table above, calculate the value of Amanda and Bill's investment in 7 year's time if they invest in the Keele index fund? (show your workings (6 marks)

4) Using the table above, calculate the value Amanda and Bill's investment if they invest in the Steele's ETF in 7 year's time? (show your workings) (6 marks)

 5) Using two sentences, explain why you think Amanda and Bill should or should not buy life insurance? (5 Marks)

Answer rating: 100% (QA)

1 To invest in the Keele Index Fund Amanda and Bill would typically contact a financial institution or brokerage They can open an investment account w... View the full answer