Questions from General Investment

Q: An investment offers $10,000 per year for 20 years

An investment offers $10,000 per year for 20 years. If an investor can earn 6 percent annually on other investments, what is the current value of this investment? If its current price is $120,000, sho...

Q: Graduating seniors may earn $45,000. If the annual

Graduating seniors may earn $45,000. If the annual rate of inflation is 2 percent, what must these graduates earn after 20 years to maintain their current purchasing power? If the rate of inflation ri...

Q: A person who is retiring at age 65 and who has $

A person who is retiring at age 65 and who has $200,000 wants to leave an estate of at least $30,000. How much can the individual draw annually on the $200,000 (starting at the end of the year) if the...

Q: For a given interest rate, what happens to the following as

For a given interest rate, what happens to the following as time increases? a) Future value of $1 b) Future value of an annuity c) Present value of $1 d) Present value of an annuity

Q: For a given time period, what happens to the following as

For a given time period, what happens to the following as the interest rate increases? a) Future value of $1 b) Future value of an annuity c) Present value of $1 d) Present value of an annuity

Q: What is the difference between a lump-sum payment and an

What is the difference between a lump-sum payment and an annuity? What is the difference between an ordinary annuity and an annuity due? Are all series of payments annuities?

Q: Investor A makes a cash purchase of 100 shares of AB&

Investor A makes a cash purchase of 100 shares of AB&C common stock for $55 a share. Investor B also buys 100 shares of AB&C but uses margin. Each holds the stock for one year, during which dividends...

Q: What is the difference between compounding (the determination of future value

What is the difference between compounding (the determination of future value) and discounting (the determination of present value)?

Q: As is explained in subsequent chapters, increases in interest rates cause

As is explained in subsequent chapters, increases in interest rates cause the value of assets to decline. Why would you expect this relationship?

Q: Your financial planning practice services several sophisticated individuals who have accumulated a

Your financial planning practice services several sophisticated individuals who have accumulated a substantial amount of assets but who are naïve concerning potential strategies to reduce taxes To inc...