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1. Jeremy Siegel shows us some very interesting data. His research showed that stocks have returned...

1. Jeremy Siegel shows us some very interesting data. His research showed that stocks have returned an average real rate of return of 6.8% from 1802 up to 2005. Assume that you had a relative who invested $1,000 in the US stock market in 1802 and left it for the next 205 years. How much real value would the account now contain?

a. $719,625,927 b. $539,964,654 c.  $436,694,123. d. $625,596,396

2. Now assume that your ancestor decided to invest the $1,000 in the bond market instead of the stock market. The bond market has had a real return of 3.5% per year over this same 205-year period. How much money would the account now contain?

a. $2,365,450 b. $3,615,520 c. $1,155,505 d. $4,754,260

3. Let’s now assume that your ancestor invested the $1,000 dollars in a bank account earning 6.8% simple interest per year for the 205-year period. How much money would be in the bank account?

a. $13,650 b. $15,697 c. $16,475 d. $14,940

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