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If each individual retires at age 6 5 , how much will his or her estimated pension be ? Life expectancy for both employees is
If each individual retires at age how much
will his or her estimated pension be
Life expectancy for both employees is years
at age If the firm buys an annuity from an
insurance company to fund each pension and
the insurance company asserts it is able to
earn percent on the funds invested in the an
nuity, what is the cost or the amount required
to purchase the annuity contracts?
If the firm can earn percent on the money
it must invest annually to fund the pension,
how much will the firm have to invest annu
ally to have the funds necessary to purchase
the annuities?
What would be the impact of each of the fol
lowing on the amount that the firm must in
vest annually to fund the pension?
a Life expectancy is increased to years.
b The rate of interest on the annuity contract
with the insurance company is reduced to
percent.
c Barber retires at age instead of
returns different?
Investor A makes a cash purchase of shares of & common stock for $ a
share. Investor also buys shares of & but uses margin. Each holds the stock
for one year, during which dividends of $ a share are distributed. Commissions are
percent of the value of a purchase or sale; the margin requirement is percent,
and the interest rate is percent annually on borrowed funds. What is the percent
age earned by each investor if he or she sells the stock after one year for a $b
$c $ and d $ If the margin requirement had been percent, what would
have been the annual percentage returns? What conclusion do
imply?
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