Suppose that $18,000 is invested in a bond fund and theaccount grows to $23,344.74 in 5 yr.a. Use the model A = Pe" to determine the average rateof returm under continuous compounding. Round tothe nearest tenth of a percent.b. How long will it take the investment to reach $30,000if the rate of return continues? Round to the nearesttenth of a year.

Continuously compounded interest rate is the interest which is calculated on the principal amount as…

Answered: Suppose that $18,000 is invested in a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 4P

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Suppose that you initially invested 10,000 in the Stivers mutual fund and 5,000 in the Trippi mutual fund. The value of each investment at the end of each subsequent year is provided in the table: Which of the two mutual funds performed better over this time period?
Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
An investor puts $2,000 into a deposit account with a fixed rate of return of 10% per year. A second sum of $1,000 is invested in a fund with an expected rate of return of 16% and a standard deviation of 8% per year. a. Find the expected value of the total amount of money this investor will have after a year. b. Find the standard deviation of the total amount after a year.
You are considering investing $1,000 in an investment fund at the end of every quarter for the next 6 years. The first investment will be made at the end of the coming quarter. The fund is expected to earn an interest rate of 10% p.a., with interest compounded quarterly. At the end of 6 years, the total dollar value in this investment fund will be closest to: Group of answer choices A.$6,388. B. $7,716. C. $32,349. D. $40,000.
An equity fund has a front end load of 4 % and special fees of 0.5% annually as well as back-end fees that start at 5 % and fall by 1 % for each full year the investor holds the portfolio until the fifth year. Assuming the rate of return on the fund net of operating expenses is 10 % annually, what will be the value of a K10 000 investment in the equity fund shares if the shares are sold after 1 year, 4 years and 10 years?
Maryse has invested $1000 into mutual fund at a 5% annual rate of return, compounded daily. What are the nominal and effective interest rates in this case?Discuss how these two interest rate affect Maryse's investment?
The value in pounds of a fund at time t = 0 is V0 = 50, 000. After one year (at t = 1) it has increased to V1 = 51, 500 and at that time £1, 500 is withdrawn. After two years (at t = 2) the fund is worth V2 = 50, 800. (a) Compute the time-weighted rate of return. (b) If the fund is liquidated after two years what is the yield that has been achieved?
A no-load (commission-free) mutual fund has grown at a rate of 10% compounded annually since its beginning. If it is anticipated that it will continue to grow at this rate, how much must be invested every year so that $120,000 will be accumulated at the end of six years?
A hedge fund with $25 million of assets under management has a standard 2/20 fee structure and earns 14 percent this year. Assume that management fees are paid at the beginning of each year and performance fees are paid at the end of each year. Assume that the fund’s fee structure also contains a high-water mark provision. What is the management fee collected by the fund managers? What is the performance fee collected by the fund managers? What is the investor’s net return?
Sevim wants to create a savings of 95,000 TL at the end of 30 years. For this purpose, it plans to continue its investment by adding 120 TL to the bank at the end of each month for the first 120 months, and 120 TL + X TL for the remaining period. Calculate the value that X will receive under the assumption that the fund in which Sevim invests has an annual effective interest rate of 4.2%.
You are a fixed term interest rate portfolio manager and have been advised that cash inflows for the fund are expected to be, $15 million now; a further $25 million is to be added to the initial investment in one years’ time, followed by a further $10 million at the beginning of the next year. These investments are made annually at the beginning of each successive year. The market is expected to provide annual returns of 7.5%, 1.5%, 5.5%% for each successive year. A. Calculate the annualised Time Weighted Rate of Return (TWRR) and the Money Weighted Rate of Return (MWRR) provided over the three-year term B. What do these calculations tell you about the timing of the investment decisions?
Consider an investment fund that starts out with £190,000. After one year, the value of the fund is £203,000. The investor deposits an additional £11,000 to the fund. After a second year, the value of the fund is £207,000. The investor withdraws £41,000. After a third year, the value of the investment fund is worth £177,000. Compute the money-weighted rate of return Enter a percentage correct to 1 decimal place Compute the time-weighted rate of return Enter a percentage correct to 1 decimal place

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