User Account

All Pages

Invest in the bond fund rather than in stocks

Assignment Help Financial Accounting
Reference no: EM13517012

Erika and Kitty who are twins just received $30,000 each for their 25th birthday. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to their "retirement fund", on her birthday, beginning a year from today. Erika opened an account with Safety first bond fund, a mutual fund that invest in high quality bonds, whose investors have earned 6% per year in the past. Kitty invested in the new issue BIO-tech fund, which invest in small, newly issued bio-tech stocks and whose investors have earned an average 20% per year in the fund's relatively short history.

a. If the two women's funds earn the same returns in the future as in the past, how old will each be when they become millionaires?

b. How large will Erika's annual contributions have to be for her to become a millionaire at the same age as Kitty, assuming their expected returns are realized?

c. Is it rational or irrational for Erika to invest in the bond fund rather than in stocks and why?

Reference no: EM13517012

Questions Cloud

Correction of a mathematical error in inventory pricing : Correction of a mathematical error in inventory pricing made in a prior period - a change from prime costing to full absorption costing for inventory valuation.
Depict the product of the reaction of cyclopentanone : Draw the product of the reaction of cyclopentanone with hydroxylamine. Draw the product of the reaction of cyclopentanone with hydrazine
Determine the angular momentum of the moon : The moon's mass is 7.4 x 10^22kg and it orbits 3.8 x 10^8m from the earth. What is the angular momentum of the moon around the earth
Explain the reaction of propanal with sodium cyanide : Draw the product of the reaction of propanal with methanol containing dissolved hydrogen chloride. Draw the product of the reaction of propanal with sodium cyanide with addition of sulfuric acid
Invest in the bond fund rather than in stocks : the two women's funds earn the same returns in the future as in the past, how old will each be when they become millionaires?
Depict the product of the reaction of propanal : a) Draw the product of the reaction of propanal with lithium aluminum hydride, followed by water. b) Draw the product of the reaction of propanal with methylmagnesium iodide, followed by dilute acid
Journalize the march transactions including explanations : Four Oaks Miniature Golf and Driving Range Inc. was opened on March 1 by Tiger Woodley. These selected events and transactions occurred during March - Journalize the March transactions including explanations
Explain the carbon skeleton of the d-galactose : If you compare D-galactose to L-galactose, all groups attached to the carbon skeleton of the D-galactose are on the opposite side compared to L-galactose
Explain what would be the volume of the mixture : If 2.00 mol of argon is mixed with 3.00 mol of xenon and the total pressure of the system is 860 torr, what are the individual pressures. what would be the volume of this mixture at 18.0 psi and 18.5 C.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd