1. You just won the New Jersey State lottery. They offer you a choice of $20,000 per year for 20 years or a lump sum cash payment of $250,000 immediately. Your current bank interest rate is 3%. Which is the better deal? Why?
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- Why are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate of interest?How much money do you have to put into a bank account that pays 10% interest compounded annually to have 10,000 in ten years?Why should a financial investor care about diversification?
- In a program of deposit insurance as it is operated in the United States, what is being insured and who pays the insurance premiums?Michelle has received two exciting job offers from two different companies, Tech Corp and Future Inc. Tech Corp offers a Defined Benefit Pension Plan (DBPP), while Future Inc offers a Defined Contribution Pension Plan (DCPP). As an aspiring investment enthusiast, Michelle would like to have a say in how her retirement funds are invested. 1) Which company should Michelle choose if she wants to have the freedom to make her own investment decisions? 2) If Michelle prefers a guaranteed income after retirement, which plan would suit her best? 3) Which plan potentially exposes Michelle to higher investment risk?1) What factors convince you to place your money with a particular organization? What specific economic incentives are important to you? What non-economic benefits or incentives are important to you? What are your main worries when choosing where to "park" your money? 2) How do you want to receive advice from the financial institution that holds your money? What advice topics would you prefer to receive in a format that lets you read/review on your own? (ex. email, newsletter, guides, etc.) What advice topics are specific to you where you'd rather interact with a real person? 3) What financial institutions are doing a good job at convincing younger generations to place their money/trust in them? Why is their approach/messaging effective?
- Deliberate specifally how and through which channelss the interest rate affects (negatively or positively) economic activities/variables and financial markets.Type out the correct answer ASAP with proper explanation of the each option.thank you. How do trends in bond interest rates help predict changes in the business cycle? A.When long-term rates are higher than short-term rates, a recession is likely. B.When long-term rates are lower than short-term rates, an expansion is likely. C.When long-term rates are higher than short-term rates, a trough is present. D.When long-term rates are lower than short-term rates, a recession is likely.How would a financial manager's role in a corporation increase/decrease if the rate of inflation in the economy was increasing. Why? How? What to do?
- Johanna is an institutional investor who is looking to “park” some of her investment funds for a short time. How would you explain to Johanna why money market instruments might be useful for her?A. Assume the interest rate in the bank is 6%. Should Apple Incorporated spend $10,000,000 to build a Research and Development facility that will yield $20 million in ten years? B. You will need $100,000 in seven years to buy a new car. How much money do you need to deposit in the bank now in order to have $100,000 seven years from now if the interest rate is 7%?The Johnson family is very conservative financially. They have a retirement plan where John works and share a joint checking account at their bank. They keep a lot of money in their checking account to cover short-term needs and emergencies. Both of them want to step up to a higher interest rate than a checking or savings account pays, and at the same time stay with their bank.The Johnsons have been thinking about the financial principle - Pay Yourself First. Being very conservative, they might consider having their bank Select one: A. sell them a risky mutual fund. B. send them a monthly reminder to make a deposit in their 401(k). C. do a direct deposit of John's paycheck into their checking account. D. do a direct deposit of some of John's paycheck into a savings fund.