Question

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

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. A one-year discount bond promises to pay 132,000 dollars next year. Brad requires a 20%...
1. A one-year discount bond promises to pay 132,000 dollars next year. Brad requires a 20% rate of return from this bond. In other words, if he thinks that the rate of return from this bond is less than 20%, he will not buy it. Another way of saying the same thing is that, Brad is not willing to pay a penny more than ______ dollars for this bond. 2. Suppose that a special bank account is paying an annual...
1.    When a company goes bankrupt, the maximum that can be lost by an investor protected...
1.    When a company goes bankrupt, the maximum that can be lost by an investor protected by limited liability is: a. the amount of the investor’s personal wealth b.   the amount necessary to pay the company’s debts c. the amount of profit on the investment d. the amount of the initial investment 2. Which of the following investment criteria doesn’t take the time value of money into account: a. Discounted payback period b.   Net present value c.   Internal rate of...
Jason and Kerri​ Consalvo, both in their​ 50's, have ​$53,000 to invest and plan to retire...
Jason and Kerri​ Consalvo, both in their​ 50's, have ​$53,000 to invest and plan to retire in 10 years. They are considering two investments. The first is a utility company common stock that costs ​$53 per share and pays dividends of ​$2.12 per share per year​ (a 4% dividend​ yield). Note that these dividends will be taxed at the same rates that apply to​ long-term capital gains. The Consalvos do not expect the value of this stock to increase. The...
1. A Treasury bond has a 10% annual coupon and a 10.5% yield to maturity. Which...
1. A Treasury bond has a 10% annual coupon and a 10.5% yield to maturity. Which of the following statements is CORRECT? * a. The bond sells at a price below par. b. The bond has a current yield less than 10%. c. The bond sells at a discount. d. a & c. e. None of the above 2. J&J Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon interest payment of...
1. Find the periodic payments PMT necessary to accumulate the given amount in an annuity account....
1. Find the periodic payments PMT necessary to accumulate the given amount in an annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $40,000 in a fund paying 5% per year, with monthly payments for 5 years, if the fund contains $10,000 at the start PMT = 2. Determine the selling price PV, per $1,000 maturity value, of the bond. (Assume twice-yearly interest payments. Do not round those payments...
1. You need a 20-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage...
1. You need a 20-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 8.1 percent APR for this 240-month loan. However, you can afford monthly payments of only $900, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. Required: How large will this balloon payment have to be for you to keep your monthly...
1-You recently sold 50 shares of Microsoft stock to your brother at a family reunion. At...
1-You recently sold 50 shares of Microsoft stock to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following best describes this transaction? * A. This is an example of a direct transfer of capital. B. This is an example of a primary market transaction. C. This is an example of a money market transaction. D. This is an example...
1-You recently sold 50 shares of Microsoft stock to your brother at a family reunion. At...
1-You recently sold 50 shares of Microsoft stock to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following best describes this transaction? * A. This is an example of a direct transfer of capital. B. This is an example of a primary market transaction. C. This is an example of a money market transaction. D. This is an example...
54. In which market would a bank with excess reserves attempt to sell reserves to a...
54. In which market would a bank with excess reserves attempt to sell reserves to a bank with insufficient reserves? (a) Treasury bill market? (b) federal funds market; (c) bond market; (d) NASDAQ. 55. When compared with monetarist theory, Keynesian theory places greater emphasis on: (a) changes in supply of money as a determinant of GDP and inflation; (b) totally discounts the role of monetary policy in determining GDP and inflation; (c) fiscal policy as a determinant of money supply...
Q 1 answer the problem A-F a You have $100 to invest. You can buy a...
Q 1 answer the problem A-F a You have $100 to invest. You can buy a 3 year CD that pays 7% interest a year. What is the vaue of the CD at the end of the 3 years b You want to put money in the stock market todayto pay for your child's college costs. She will be going to to college in 18 years and you want to have $250,000 saved by then. You expect to earn 8%...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT