Answered: a stock index fund that had an average…

a stock index fund that had an average APR of 11% over the last year. estment in 5 years and advise Claire about how to invest the money. There are different e sure to give reasons for your advice.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

1. Claire wants to invest $10,000 she got as a graduation gift from her family. She has the following options.
(i) SAFE: Put it in a savings account that has an APR of 1.5% interest compounded monthly.
(ii) MORE RISKY: Put it in a stock index fund that had an average APR of 11% over the last year.
Find the value of each investment in 5 years and advise Claire about how to invest the money. There are different
ways to advise Claire so be sure to give reasons for your advice.
2. How much must you deposit today into an account with quarterly compounding interest and an APR of 6% in
order to have $30,000 in 10 years for a down payment on a house? Assume no additional deposits are made.
How much of the money saved is interest?

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