Question
At the end of each year, for the past 25 years Sara has deposited $6,000 in her savings account. A risk-averse investor, during that period
At the end of each year, for the past 25 years Sara has deposited $6,000 in her savings account. A risk-averse investor, during that period her conservative investment choices averaged a 4.8% annual return, compounded semi-annually. Heather made the same sized deposits in her own account, but she was more of a risk-seeker. Over the same 25 year period, due to her more aggressive investment choices Heather averaged an investment return of 7.3%, compounded monthly. How did Sara's account fare compared to Heather's, in terms of future value? Did Sara make poor choices? Discuss.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started