Invests the inheritance in bonds

Assignment Help Business Economics
Reference no: EM131196890

Jimmy has studied the bond market for the last century, and has determined that the real interest rate is 2%. He has also studied the stock market, and determined that the prevailing real growth rate of stocks is 6%. Jimmy is 29, and has just inherited $40,000 (let us ignore the sad circumstances surrounding the untimely death of his favorite aunt).

a. If Jimmy invests the inheritance in bonds, how much can he expect to have (in 2016 dollars) when he retires at 65?

b. How much will he have if he puts the $40,000 in stocks instead?

Reference no: EM131196890

Questions Cloud

Describe one marketing fail and what happened : Describe one "marketing fail". Describe what happened. (Include an external link to an article describing what happened or an example of the fail.) Describe the fallout/negative repercussions.
List the elements of a sample space : Attach probabilities to these elements if all possible outcomes are equally likely.
Calculate the ending balance of raw materials : Calculate the ending balance of Raw Materials.- Calculate the ending balance of Work in Process.-  Calculate the ending balance of Finished Goods.
Key elements about coca-cola campaign : In your opinion, what key elements about Coca-Cola's campaign made it so successful and why? What factors should companies consider when deciding on potential global markets to enter?
Invests the inheritance in bonds : Jimmy has studied the bond market for the last century, and has determined that the real interest rate is 2%. He has also studied the stock market, and determined that the prevailing real growth rate of stocks is 6%. Jimmy is 29, and has just inherit..
What are your thoughts on the vaccine controversy : What are your thoughts on the vaccine controversy? Why do you think such fear and skepticism persist among some parents even though the vast majority of doctors and scientists maintain there is no link between vaccines and autism?
Distinguish between the five types of needs : Explain needs wants and demands. In a short essay, describe how a marketer may distinguish between the five types of needs for a consumer who says she wants an affordable ski boat.
Pricing and retail strategy : Option #1: Pricing and Retail Strategy In this assignment, you will evaluate pricing and retail strategy. In this essay:
Review the balance sheet of the company : Use the annual report for the year ending 30 June 2015. Your group will need to review the major sections of this report in order to familiarize yourselves with the content of each of the financial statements and appropriate notes to the financial..

Reviews

Write a Review

Business Economics Questions & Answers

  Short-run total cost function for firm producing skateboards

The short-run total cost function for a firm producing skateboards is TC= 18q^2-9q+72 where q is the number of skateboards per week. (1) What is the fixed cost? What is the variable cost?

  What marr does the investment represent

A college graduate with a B.S. in Mechanical Engineering expects to earn, on average, $20,000 per year more than an engineer without a B.S. degree. If the graduate expects to work for 35 years, and the cost of the college education is $100,000, what ..

  Different derivative instrument relating to foreign exchange

Discuss a variety of different derivative instruments relating to foreign exchange. What is the underlying function of these different instruments? Can the same goal be achieved using different derivative instruments? How? Consider the term disinterm..

  Positive accounting profits and zero economic profits

What would be a numerical example that would illustrate a situation in which there are positive accounting profits and zero economic profits?

  Q1 confronted with a choice between 50 today or 100 one

q1. confronted with a choice between 50 today or 100 one year from now economic experts suggest that the vast majority

  Consider partial factor tax on capital used in food industry

Imagine a world with two goods, food (F) and shelter (S), and two factors of production, labor (L) and capital (K). Assume that labor and capital can be employed in either sector of the econ omy (the food sector or the shelter sector) and that these ..

  Contractual remedies

Haply Inc. contracts with Barksdale LLC to have an engine repaired. After much negotiation, the parties agree that the engine will be repaired and reinstalled at Haply’s facilities in 5 days. Haply plans on losing $40,000 a day for each day the engin..

  Never give up

The rule for maximization set forth in the text contradicts some honored traditional principles such as 'never give up' . Anything worth doing is worth doing well, or waste not, want not' explain the contradiction for each of these rules.

  What are the governments fiscal policy options

What are the government's fiscal policy options for ending a severe recession? What are the short term and long term consequences of using fiscal policy for ending a server recession? What are the Monetary policy tools the Federal Reserve Board uses...

  Fed do to combat inflation and fight recession

What is the basic determinant of the Trans D and Asset D for money? Graph each? How is equilibrium in money market determined? What would the Fed do to combat inflation and fight a recession?

  Measure of expected labor productivity growth

Suppose someone else tells you that even if average real wages or average real compensation per hour increase, economic inequality could increase as well. Is this possible? To judge that overall prospects for a motion, what information might you want..

  The factors which affected labor demand also labor supply

Illustrate what was the impact on the supply also demand of labor on one sector of the labor market. Elucidate the factors which affected labor demand also labor supply in the chosen historical example.

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!

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