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1. You plan on retiring in 30 years from now. One month after you retire you plan on withdrawing $10,000 per month from your retirement account for the remainder of your life for 30 years. You also plan on leaving your four grandchildren $10,000 each. If your retirement account offers 10% compounded monthly, how much must you save each month of your working life so that you can meet your goals?
A: $904.99
B: $504.99
C: $804.99
D: $704.99
E: $604.99
2. ?Assume that the Treasury bond yield today is 2 percentage points higher than it was one year ago. Also assume that the credit (default) risk premium of an A-rated bond declined by 0.4 percentage point since one year ago. A newly issued A-rated bond will likely offer a yield today that is ____ the yield that was offered on an A-rated bond issued one year ago.
a. ?greater than
b. ?equal to
c. ?less than
d. ?A or B are both common
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Suppose the stock price is $50 and the continuously compounded interest rate is 10%. What is the price of a 4-month forward price, assuming dividends are zero? If the 4-month forward price is $51.1, what is the annualized forward premium?
What would be your recommendation to people close to retirement that are typically advised to hold significant portion of their retirement portfolio in US bonds
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