FINC1123 Personal Finance Homework on Investment Solve the following problems. Show steps clearly. 1. Sally has monthly income of $5,600. Her living expenses per month amount to $1,200 for food, utilities, entertainment, etc. She pays $250 for insurance (property, health and life combined) every month. Her monthly mortgage payment is $1,000. She has credit card balances of $750. She already saved enough in emergency fund. How much money can Sally set aside for investment per month? 2. Assume you have $50,000 to invest in Morgan Stanley Company. Its price is $100 per share. It pays annual dividend of $2 per share. Assume you sell your shares at the end of the year for $110 each. What is your rate of return? 3. Assume ABC Company bond of $1,000 par value, 8% annual coupon and 10 years maturity trades at $1,000. Assume Isaak buys this bond and holds it for four years and sells it when interest rate in the economy for similar bonds is 10%. a) at what approximate price would Isaak sell the bond? b) calculate Isaaks holding period rate of return over four years. c) calculate Isaaks average annual rate of return. 4. Describe the advantages and disadvantages of investing through mutual funds.