# 1. Suppose you are a bond broker. You have a municipal bond availab...

## Question

1. Suppose you are a bond broker. You have a municipal bond available that yields 5.5% and corporate bonds with interest rates of 6.5%.
You have three customers who want bonds and their tax rates are:
Customer A: 10%
Customer B: 18%
Customer C: 25%
Which customer(s) should invest in municipal bonds and which should invest in corporate bonds?

Customer A should buy corporate bonds; customer B & C should buy municipal bonds
Customer A & B should buy corporate bonds; customer C should buy municipal bonds
Customer A & B should buy municipal bonds; customer C should buy corporate bonds
Customer A should buy municipal bonds; customer B & C should buy corporate bonds

2. Jack and Jill went to school together. Even thought they were the same age and attended the same classes, they handled their finances differently. Jill begins to invest \$3,000 per year at age 20, and continues for 10 years. At that point she stops working outside the home and does not add any more money to her investments.
On the other hand, Jack doesn't invest until he is 30 years old. He then begins to invest \$3,000 per year until he retires at 65 years old.
Both of them consistently average 9% per year on their investments. What is the difference in the amount between their retirement funds when they reach 65 years of age?

4. Given the following information, how much savings would you have at retirement if you invested your savings at 8.5% APR compounded monthly?
You have an average income of \$51,396 per year over the 38 years of your employment.

\$1,305,707.10
\$1,363,738.53
\$1,450,785.67
\$1,479,801.38

5. A \$14,679 face value bond with a coupon rate of 8.5% is currently selling for \$7,031. What is the current market yield?

16.1%
19.5%
17.2%
17.7%

6. The total assets of the ABC Mutual Fund Company is \$75.25 million dollars. The company has liabilities of \$8.5 million dollars. The company has 15 million shares authorized, with 12 million outstanding. What is the book value per share for the ABC Mutual Fund Company?

\$5.56
\$5.06
\$5.37
\$5.49

7. Your 31 year old brother tells you he wants to have \$1,664,195 in his retirement fund when he retires at age 66. How much should you tell him to save per month if he can invest at 8.6% APR compounded monthly?

\$656.66
\$631.65
\$594.12
\$625.39

8. If at age 31 you make \$45,887 per year, how much annual retirement income would you need if you retire at age 70? You believe that 80% of your present income would be adequate. Assume an inflation rate of 3.5%.

\$126,385.08
\$136,215.03
\$132,002.19
\$140,427.87

9. A bond with a face value of \$13,892 and a coupon rate of 7.5% will sell for what price if the market rate is currently 10.0%?

\$13,023.75
\$10,419.00
\$11,460.90
\$13,892.00

10. Describe why a young couple just starting out their career might be more interested in a Roth IRA than a traditional IRA.

## Solution Preview

These solutions may offer step-by-step problem-solving explanations or good writing examples that include modern styles of formatting and construction of bibliographies out of text citations and references. Students may use these solutions for personal skill-building and practice. Unethical use is strictly forbidden.

By purchasing this solution you'll be able to access the following files:
Solution.xlsx.

\$45.00
for this solution

or FREE if you
register a new account!

PayPal, G Pay, ApplePay, Amazon Pay, and all major credit cards accepted.

### Find A Tutor

View available Business - Other Tutors

Get College Homework Help.

Are you sure you don't want to upload any files?

Fast tutor response requires as much info as possible.