Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that the net return to an active fund (after fees) is 9.5% (0.79% per month) and the net return to a passive fund is

Assume that the net return to an active fund (after fees) is 9.5% (0.79% per month) and the net return to a passive fund is 10.5% (0.875% per month). Consider an investor who invests $600 per month (end-of-month) over thirty years in the passive fund. What is the future value of her savings? Now consider an investor who invests on a monthly basis over thirty years in the active fun. If the active fund investor wants the same future value as the passive fund investor, then how much more must she invest per month?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

ANSWER i FV passive 600 1000875... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

9th Edition

73530700, 978-0073530703

More Books

Students also viewed these Finance questions

Question

=+b) What might you consider doing next?

Answered: 1 week ago