Long-Term Investing
Sandra deposits $3,000 at the end of each semiannual period for 12 years at 10% interest compounded semiannually. Determine the amount she will have in the account after 12 years. Round to the nearest cent.
$133,506.00
Kristen owns 61 shares of Prince Waste Collection and 45 shares of Nar Heating/Cooling. Nar Heating/Cooling is worth $7.88 per share and Prince Waste Collection is worth $16.59 per share. If Kristen sells all of her stocks, how much money will she receive?
$1366.59
Heidi contributes 11% of her monthly salary towards her 401(k) and her employer matches her contribution up to 6% of her salary. If the interest rate of her 401(k) is 6.25% compounded monthly and her monthly salary is $3,250, determine the amount in her account after 15 years. Round to the nearest cent.
$164,146.52
Suppose that a family wants to start a college fund for their child. If they can get a rate of 7.5%, compounded monthly, and want the fund to have a value of $75,000 after 18 years, how much should they deposit monthly? Assume an ordinary annuity and round to the nearest cent.
$164.98
You plan on supplementing your income. You would like to withdraw a semiannual salary of $6,951.20 from an account paying 1.75% interest, compounded semiannually. Determine the amount needed in the account such that you can withdraw the needed amount at the end of each period for 15 years. Round to the nearest cent.
$182,713.25
If the maximum payment of $5,000 is made into a Individual Retirement Account (IRA) for 25 years at an annual interest rate of 3.2%, determine the amount in the account.Round to the nearest cent.
$187,159.62
Ana is retiring next year from the school that she has taught at for the last 25 years. Her pension pays a monthly salary of $1,562.32. She also receives a monthly income from an IRA that she has made regular monthly payments, in the amount of $230.32, for the last 15 years. If Ana plans on using her pension and the funds from her IRA as her primary source of income for the next 10 years, determine Ana's monthly income given that her IRA compounds interest at 2.3% monthly. Round to the nearest cent.
$2,024.02
If the lowest price in the past year occurred 35 days ago, find the approximate average change per day since then.
$2.08
Phillipe buys 50 shares of Green Energy and 120 shares of TJH Small-Cap. What is Phillipe's total investment?
$3,186.50
Stephen bought 85 shares of United Rotators at $6.34 each, 110 shares of Dowc Beverage Co. at $13.13 apiece, and 133 shares of Esti Transport at $7.10 each. If Stephen's broker collects a commission of $12.50 for every ten shares bought or sold, how much did Stephen spend in total, to the nearest dollar?
$3,338
An account paying 3.2% interest compounded semiannually has a balance of $32,675.12. Determine the amount that can be withdrawn from the account semiannually for 5 years. Assume ordinary annuity and round to the nearest cent.
$3,561.90
For the last 20 years, Terry has made regular quarterly payments in the amount of $308 into an account paying 1.5% compounded quarterly. If, at the end of the 20 year period, Terry stops making deposits, transfers the balance to an account paying 5.5% interest compounded annually, and withdraws a annual salary from the account, determine the amount that he will receive every year for 10 years. Round to the nearest cent.
$3,803.97
Nezzie plans to sell all of her shares when she can profit $5,000. What must the net asset value be in order for Nezzie to sell?
$33.66
Tina contributes 9.5% of her monthly salary towards her 401(k) and her employer matches her contribution up to 5.4% of her annual salary. If the interest rate of her 401(k) is 8.1% compounded monthly and her monthly salary is $2,461, determine the amount in her account after 25 years. Round to the nearest cent.
$354,452.86
Geoffrey buys 48 shares of Deegan Pharmaceuticals at $6.15 each, and his broker charges him a commission of $81. How much did Geoffrey pay for his stock?
$376.20
A married couple buys 280 shares of stock for a total investment of $8,722. They decide to sell all of their shares in the fund at the listing value shown below.
NOT Loss of $0.05 per share
Elly buys 75 shares of stock in a mutual fund for a total investment of $450. She sells 50 shares of her stock for total proceeds of $400. Determine if Elly made a profit or loss, and how much per share.
NOT Loss of $0.67 per share
Mark is looking for professional financial assistance. Mark has never invested before and is not quite sure where to start. He knows that he wants to build up investments for future projects such as retirement, but he is not sure how to navigate investment in light of his existing debts.
Recommend an appropriate financial professional for Mark. Financial planner
If an account is increasing at a rate of 3.3% compounded semiannually, what is the exact value of i in the following present value ordinary annuity formula?
0.033/2
Today, Ken sold the 116 shares of Bukkia Hog Farms that he purchased yesterday. How much profit did Ken make?
$1,026.60
Stock in Globin Publishing costs $8.72 per share. Mary buys 105 shares of Globin Publishing, and her broker charges a commission of $348. How much did Mary pay for the stock?
$1,263.60
Melanie purchased 621 shares of Animite Energy at $30.60 apiece. When the price hit $36.23 per share, Melanie sold her holdings in Animite Energy. Melanie's broker charges $48 for each $1,000 of stock bought or sold. How much profit did Melanie make?
$1,504.17
An investor buys 400 shares of stock in a fund when the net asset value is $23.79 and the offer price is $23.89. The investor sells these shares when the net asset value is $50.34 and the offer price is $50.46. Determine the amount of profit the investor earns.
$10,580
Leo is 23 years old and works for a company that matches his 401(k) contribution up to 4.6%. The interest rate for his 401(k) is 5.32%. If he puts away 8% of his $65,000 salary every year, how much would he have saved in 10 years? Round your answer to the nearest cent.
$104,564.67
Based on this information, what was yesterday's price for Parchar Special Effects?
$119.25
You put $300 at the end of each month in an investment plan that pays 7% interest, compounded monthly. How much will you have after 18 years? Round all answers to the nearest cent, when applicable.
$129,216.31
Determine the amount needed such that when it comes time for retirement, an individual can make monthly withdraws in the amount of $2,154 for 30 years from an account paying 5.1% compounded monthly. Round your answer to the nearest cent.
$396,721.78
Drius Security stock has a yearly dividend of $12.11. If you own 132 shares of Drius Security, how much do you get paid in quarterly dividends?
$399.63
What were Nyromi's proceeds?
$4,617.50
June's portfolio includes 177 shares of Parchar Special Effects, 213 shares of Giaco Household Goods, and 152 shares of Raxin Accounting. If Parchar Special Effects pays a yearly dividend of $8.21 per share, Giaco Household Goods pays $6.97 per share, and Raxin Accounting pays $11.44 per share, how much does June earn in dividends per year?
$4,676.66
The share price of Grath Oil is currently $77.06. Several months ago, when the price was $51.21, Charles bought 186 shares of Grath Oil. If he sells all of his stock in Grath Oil today, how much profit will he make?
$4,808.10
Tracy buys 150 shares of Upton Group and 100 shares of WHI Health. What is Tracy's total investment?
$4,940.00
Andrew owns stock in Hyren Airlines and as a result gets paid dividends worth $539.70 every year. If Andrew owns 105 shares of Hyren Airlines, how big is the dividend each share yields?
$5.14
What was the price of SFT Legal yesterday?
$50.37
Darryl's portfolio includes 66 shares of Essentia Inc., 95 shares of SFT Legal, and 180 shares of Grath Oil. If Essentia Inc. pays a yearly dividend of $1.79 per share, SFT Legal pays $2.62 per share, and Grath Oil pays $1.18 per share, how much does Darryl receive in dividends every year?
$579.44
Stock in Trochel Office Supplies trades at $72.40 per share and pays a yearly dividend of $6.92 per share. If David owns stock in Trochel Office Supplies worth $6,443.60, how much does he get paid in yearly dividends?
$615.88
Say you own 316 shares of Esti Transport stock, which offers an annual dividend of $8.16 per share. How much will you receive in quarterly dividends?
$644.64
Trent is 25 years old and works for a company that matches his 401(k) contribution up to 5%. The interest rate for his 401(k) is 7.3%. If he puts away 10% of his $32,000 salary every year, how much would he have saved in 10 years? Round your answer to the nearest cent.
$67,266.16
Will is 30 years old and works for a company that matches his 401(k) contribution up to 3%. The interest rate for his 401(k) is 7.13%. If he puts away 9% of his $41,000 salary every year, how much would he have saved in 10 years? Round your answer to the nearest cent.
$68,395.76
You plan on making a $235.15 monthly deposit into an account that pays 3.2% interest, compounded monthly, for 20 years. At the end of this period, you plan on withdrawing regular monthly payments. Determine the amount that you can withdraw each month for 10 years, if you plan on not having anything in the account at the end of the 10 year period and no future deposits are made to the account.
$769.27
Ken has just retired. His Roth IRA has a present value of $524,856.00 and has an interest rate of 3.4%, compounded annually. In addition, he receives a yearly pension of $32,615.12. Given that Ken plans to draw from his Roth IRA for the next fifteen years, find his total annual income.
$77,862.30
Andy would like to withdraw an annual salary of $45,000 from an account paying 3.1% compounded annually for 25 years once she retires. Given this information, determine the amount needed in her account in order for her to reach her goal. Round to the nearest cent.
$774,931.58
David has a bank account which pays interest at the rate of 1.5% per year, compounded annually. Determine what amount David must have in the bank, given that he would like to draw an annual salary of $32,635.15 from his account at the end of each year for 30 years. Round to the nearest cent.
$783,760.48
Say you own 5,715 shares of Sanden Research Labs, each of which pays a yearly dividend of $14.66. How much do you receive in dividends every year?
$83,781.90
Rayje Clothiers stock pays a yearly dividend of $9.03 and trades for $159.50 per share. If Eli owns stock in Rayje Clothiers worth $14,833.50, how much does Rayje Clothiers pay Eli in annual dividends?
$839.79
Brett owns 236 shares of Animite Energy Co., each of which offers a yearly dividend of $3.59. How much money does Brett receive from dividends every year?
$847.24
Tina would like to withdraw an annual salary of $35,756 from an account paying 2.2% compounded annually for 35 years once she retires. Given this information, determine the amount needed in her account in order for her to reach her goal. Round to the nearest cent.
$866,442.02
Cynthia's broker charges her a commission of $88 for every $1000 of stock bought or sold. Cynthia bought 2,000 shares of Ombor Medical Supplies at $35.49 apiece. As the price rose and fell, she sold off part of her holdings. When the price rose to $48.57, she sold 600 shares. The price fell somewhat to $46.10, so she sold 1,150 of her shares. When the price climbed to $53.46, she sold off the remainder of her holdings. How much profit did Cynthia make in total?
$9,889.82
Geoffrey's portfolio includes 4,462 shares of United Rotators, which earns him $43,772.22 annually. What is the yearly dividend on each share of United Rotators?
$9.81
If quarterly payments are made for 15 years, find the value for n in the following present value ordinary annuity formula.
(60)
If an account is increasing at a rate of 2.1% compounded monthly, what is the exact value of i in the following future value ordinary annuity formula?
0.021/12
Chester has a par value $500 bond issued by Harris County. The bond pays 6.2% yearly interest, and has a current market rate of 98.626. If Harris County bonds had a market rate of 101.760 when Chester bought it, what is the current yield on Chester's bond?
0.061
Miranda purchased 425 shares of Dagofi Radar stock at $14.15 apiece. She earns $374.00 in dividends every year. What is the yield on Miranda's Dagofi Radar stock?
0.0622
Say that your broker charges you a commission of $1,340.75 for your purchase of 258 shares of stock in Ergar Appliances. If Ergar Appliances has a list price of $73.96 and pays a dividend of $11.45 per share, what is your annual yield?
0.1446
Prince Waste Collection pays a yearly dividend of $14.94 per share of stock. If Prince Waste Collection pays Kathy $46,926.54 in dividends every year, how many shares does Kathy own?
3141
Theo buys 116 shares of Raxin Accounting at $15.66 per share and 165 shares of Sanden Research Labs at $8.57 per share. If Theo's broker charges a commission of $11.50 per ten shares bought or sold, how much does Theo pay in commission?
323.15
Xyx Motors pays Nick $1,567.46 in dividends every year. If the dividend on one share of Xyx Motors is $4.33, how many shares does Nick own?
362
Yesterday, stock in Chambers Translation sold for $87.19 per share. Today, the same share costs $95.45. How would the net change appear in a stock listing?
8.26
What is the biggest difference in who controls the 401(k) and IRA retirement plans?
A 401(k) is controlled and monitored by an employer, and an IRA is controlled by the investing individual.
What is a commission, as it relates to the stock market?
A fee paid to a broker for making a trade
Broker P charges a commission of $8.50 for every ten shares of stock, and Broker Q charges a fee of $65.00 for every thousand dollars bought or sold. If stock in Ergar Appliances costs $18.75 per share and you buy 500 shares, which broker is the better deal, and by how much?
Broker P will charge $184.38 less than Broker Q.
Rod is looking for professional financial assistance. Rod has a solid grasp of how investing works, but needs a way to handle the actual buying and selling of stocks. Rod knows where he wants his portfolio to be over the long term, and he believes that he knows in which companies he wishes to invest. Recommend an appropriate financial professional for Rod.
Discount Broker
Stocks tend to make better short-term investments, while bonds tend to make better long-term investments. Define the concept of risk in investment. Risk refers to the likelihood that your investments will lose value and end up costing you money. For example, if you invest in a stock of a company that later goes bankrupt, you will have lost the money that you invested. The chance that the stock would lose value is the risk you accepted when you invested in the stock.
F
Which legally required form divulges information about financial advisors?
Form ADV
What is the difference between a full-service broker and a discount broker?
Full-service brokers charge higher fees than discount brokers, but provide more services. Full-service brokers will help recommend investment opportunities and will do research on companies and mutual funds into which you might consider investing. Discount brokers will generally only allow you to buy and sell stocks and do not make suggestions or offer advice.
Which of the following services will be provided by a full-service broker but not by a discount broker? I. Research of potential investment opportunities II. Purchase and sale of stock at your request III. Recommendation of investments
I and III
Which of the following retirement plans places a maximum amount that an individual can contribute to the fund in a given year at $5,000?
IRA
Ethan is planning for his retirement. He has narrowed it down to two investment options. The first is an IRA where monthly payments are made, in the amount of $416.66, for 30 years. The second is a Roth IRA where annual payments are made, in the amount of $5000, for 30 years. If both compound interest at a rate of 2.5%, determine which account will yield the largest future value for Ethan, and how much greater that value will be than that of the other account. Round your final answer to the nearest cent.
IRA; $3,552.72
A Roth IRA and a Tax Deferred investment plan are just two of many ways you can invest into for your retirement. If you wanted to contribute amounts greater than $5,000 a year, which of the two investment plans would you consider and why?
If an amount greater than $5,000 is made on an annual bases, then the Tax Deferred Annuity will be the best investment plan. A Roth IRA will only allow a maximum of $5,000 to be deposited annually, where as the Tax Deferred Annuity has no contribution limit
The following table list two investment plans, A and B. Given this information, determine which investment is an ordinary annuity and the future value of the ordinary annuity after one year, given that both investments, A and B, compound interest monthly at the rate of 3.5%. Round to the nearest cent.
Investment B is an ordinary annuity with $3,906.64 in the account after 1 year
Rochelle plans to sell all of her shares when she can profit $6,250. What must the net asset value be in order for Rochelle to sell?
NOT $12.50
An investor buys 400 shares of stock in a fund when the net asset value is $19.62 and the offer price is $19.84. The investor sells these shares when the net asset value is $43.19 and the offer price is $43.56. Determine the amount of profit the investor earns.
NOT $9,576
A mutual fund's net asset value increases by $5 per share. An investor who owns 450 shares of this fund sells them all for a profit of $2,205. What can you conclude about the fund?
NOT The fund is a no-load fund.
Chyra redeemed 175 shares of stock she owned in the fund shown below. What were Chyra's proceeds?
NOT $77
A mutual fund has total assets of 2.4 million dollars and 300,000 shares. What is the net asset value of one share of the fund?
NOT 0.08
Salazar made an investment in 140 shares of stock in a no-load fund for $2,993.20. After one year the stock had a net asset value of $24.53 per share. If Salazar redeems all 140 shares, which of the following is a correct statement?
Salazar will have a profit of $441.
Why does the government issue only bonds, while companies issue both stocks and bonds?
Stock in a company gives the holder part-ownership of the company, with voting rights on big decisions, and profits when the value goes up. The people already vote on happenings in the government and inherently have ownership of the government.
What is the largest difference in stocks and bonds?
Stocks are a share of ownership in a company and give the stockholder voting rights, while bonds are similar to lending a company or government money.
Why would a mutual fund, a collection of stocks, bonds, and other securities, have less risk than investing in stocks alone?
Stocks are higher risk than most other securities in a mutual fund, but when averaged with the risk of the other securities, mutual fund risk is not as high as stock risk.
Which of the following statements about length of investment is correct?
Stocks tend to be better long-term investments than bonds because bonds do not have the same growth potential that stocks do.
If a mutual fund has net assets of $294,000 and 16,800 shares, then each share has a net asset value of $17.50.
T
Josef owns four par value $1,000 bonds from Dowc Beverage Co. Each bond has a market value of 104.561 and gives 9.2% interest. Josef also owns 170 shares of stock in Dowc Beverage Co. Stock in Dowc Beverage Co. has a share price of 26.25 and pays a dividend of $2.38. If the broker Josef employed to purchase these stocks and bonds charges a commission of $72 for each ten shares of stock bought or sold and a commission of 4% of the market value of each bond bought or sold, which aspect of Josef's investment in Dowc Beverage Co. has a greater percent yield, and how much greater is it?.
The bonds have a yield 1.35 percentage points higher than that of the stocks
Maria owns four par value $1,000 bonds from Prince Waste Collection. The bonds pay yearly interest of 7.7%, and had a market value of 97.917 when she bought them. Maria also owns 126 shares of stock in Prince Waste Collection, each of which cost $19.33 and pays a yearly dividend of 85 cents. Which aspect of Maria's investment in Prince Waste Collection offers a greater percent yield, and how much greater is it?
The bonds have a yield 3.466 percentage points greater than that of the stocks.
Stock in Ombor Medical Supplies earns a return of 5.3% annually, while bonds issued by Ombor Medical Supplies earns a return of 4.1% annually. If you invest a total of $2,400 in Ombor Medical Supplies, $1,400 of which is in bonds and $1,000 of which is in stocks, which side of the investment will show a greater return after six years, and how much greater will it be?
The bonds will earn $26.40 more than the stocks.
Eight years ago, Ian invested in Rayje Clothiers. He purchased five par value $1,000 bonds issued by Rayje Clothiers at a market value of 94.956, each of which yields interest of 7.5%. Ian also bought 250 shares of Rayje Clothiers stock at $17.22 apiece. Bonds from Rayje Clothiers yield interest of 7.5%, and stock from Rayje Clothiers yields dividends of $1.09 yearly. Today, Rayje Clothiers bonds have a market value of 108.224 and Rayje Clothiers stock sells for $19.96 per share. If Ian liquidates his portfolio and sells off all of his investments, which aspect of his investment in Rayje Clothiers will yield the greater total profit, and how much greater will it be?
The bonds yielded $798.40 more in profits than the stocks.
What is risk, as pertains to investing?
The chance you take that your investments will lose their value.
What is the SEC?
The government agency which oversees the trading of stock
Four years ago, Sam invested in Grath Oil. She bought three of its $1,000 par value bonds at a market price of 93.938 and with an annual coupon rate of 6.5%. She also bought 450 shares of Grath Oil stock at $44.11, which has paid an annual dividend of $3.10 for each of the last ten years. Today, Grath Oil bonds have a market rate of 98.866 and Grath Oil stock sells for $45.55 per share. Use the scenario above to consider which statement best describes the relative risk between investing in stocks and bonds.
The market price of the bonds is more stable than the price of the company's stock.
The net asset value of stock in a mutual fund had increased by $20 per share when an investor decided to redeem them. The investor had purchased 100 shares of the stock for $2,316 and redeemed them for $4,301. What can you conclude about the fund?
The offer price of the fund was $0.15 more than the net asset value when purchased.
Mark has invested in Evu Confectioners. He owns 220 shares of stock in Evu Confectioners, with each share costing him $14.79 apiece but paying a yearly dividend of $2.03. Mark also owns three par value $500 bonds from Evu Confectioners, each of which had a market value of 93.630 and which pay 8.8% interest. If Mark's broker charges a commission of $55 per ten shares of stock bought or sold and a commission of 3% of the market value of each bond bought or sold, which aspect of Mark's investment in Evu Confectioners has the greater percent yield, and how much greater is it?
The stocks have a yield 0.88 percentage points greater than that of the bonds.
Edgar owns 234 shares of Cawh Consolidated Bank, which he bought for $21.38 apiece. Each share pays a yearly dividend of $3.15. Edgar also owns two par value $1,000 bonds from Cawh Consolidated Bank. The bonds had a market value of 105.166 when he bought them, and pay 8.3% interest yearly. Which aspect of Edgar's investment in Cawh Consolidated Bank offers a greater percent yield, and how much greater is it?
The stocks have a yield 6.84 percentage points greater than that of the bonds.
Brenda has money invested in Esti Transport. She owns two par value $1,000 bonds issued by Esti Transport, which currently sells bonds at a market rate of 101.345. She also owns 116 shares of Esti Transport stock, currently selling for $15.22 per share. If, when Brenda made her initial investments, Esti Transport bonds had a market rate of 96.562 and Esti Transport stock had a share price of $13.40, which side of Brenda's investment has gained a greater percent return, and how much greater is it?
The stocks showed a return that was 8.63 percentage points higher than that of the bonds.
Five years ago, Benjamin invested in Parchar Special Effects. He purchased four par value $1,000 bonds from Parchar Special Effects at a market rate of 96.230. Each bond had an interest rate of 7.2%. Benjamin also purchased 200 shares of stock in the same company, each of which cost $19.08 and had a yearly dividend of $2.04. Today, bonds from Parchar Special Effects have a market rate of 104.595, and stock in Parchar Special Effects costs $22.62. If Benjamin liquidates his portfolio and sells all of his investments, which aspect of his investment will have yielded him a greater total profit, and how much greater is it?
The stocks yielded $973.40 more in profits than the bonds.
Much of Ann's investments are in Cilla Shipping. Ten years ago, Ann bought seven bonds issued by Cilla Shipping, each with a par value of $500. The bonds had a market rate of 95.626. Ann also bought 125 shares of Cilla Shipping stock, which at the time sold for $28.00 per share. Today, Cilla Shipping bonds have a market rate of 106.384, and Cilla Shipping stock sells for $30.65 per share. Which of Ann's investments has increased in value more, and by how much?
The value of Ann's bonds has increased by $45.28 more than the value of her stocks.
Drew has invested in Iwad Records. He owns three par value $1,000 bonds from them, which are currently selling for 99.773. He also owns 600 shares of Iwad Records stock, the current value of which is $5.28 per share. If, when Drew made his investment, Iwad Records bonds had a market price of 94.561 and stock in the same company sold for $5.00 per share, which investment has increased in value more, and by how much?
The value of Drew's stocks has increased by $11.64 more than the value of his bonds.
Between the two investment plans listed below, which will have the greatest future value and by what amount? Round all answers to the nearest cent.
To determine the future value for the 401(k), we need to determine the amount contributed annually. It is stated that the amount the employee contributes to the fund is 9% of $45,624. $45,624(0.09) = $4,106.16 The employer contributes a maximum of 3% of the employee contribution. Therefore: $45,624(0.03) = $1368.72. Therefore, the total annual contribution is $5,474.88, giving a future value of $196,302.40. For the Roth IRA, the monthly contributions are $352.45 giving a future value of $152,636.09. Therefore, the 401(k) has a greater future value by $43,666.31.
Explain why the offer price is used to calculate the investment in a load mutual fund instead of the net asset value.
When purchasing load mutual funds, you are charged a fee, or commission, which is added to the fund's net asset value. The total of the net asset value and the commission, called the offer price, is the price you actually pay for each share of the fund.
Which of the following is not something you should consider when evaluating a broker?
Whether or not they are registered with FINRA.
You are a financial advisor with a client who purchased 100 shares of stock in a fund with a net asset value of $21.30 and an offer price of $21.45. Your client wants to make $20 per share on the stock when it is sold. The client calls you to find out why you have not sold the shares today, because they saw the stock listed with a net asset value of $41.30 and an offer price of $41.45. Explain to your client why you have not sold the shares.
You paid the offer price of $21.45 per share for your stock, and you can sell it for its net asset value of $41.30 per share. That is a profit of only $19.85 per share, which is not the $20 per share you want to get.
Which of the following expressions is equal to the total investment of a no-load mutual fund?
net asset value x number of shares
