Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Miriam lives at home with her mother, father, and sister. She recently started a job and is planning to move into her own flat.
Miriam lives at home with her mother, father, and sister. She recently started a job and is planning to move into her own flat. She wants to buy a flat four years from now, knowing that she will need a deposit of at least 10,000 in order to do so. Miriam has just received a sum of 2,000 from her grandfather's will, which she has deposited in a savings account. 2.1 If Miriam uses all her savings and saves 120 per month, what rate of return will she need to reach her target of 10,000 after four years? (3 marks) 2.2 Miriam has seen that shares (equities) in a particular high-tech start-up company have given a 15 per cent return each year, over the past two years. She is considering using all her inheritance to buy shares in this company. Give two reasons why putting all her inheritance into this one company's shares might not be the optimum strategy. (4 marks) 2.3 Miriam can obtain a rate of return on her savings that will enable her to reach her target deposit, if she commits to a savings plan that runs for 8 years (rather than 4) with no scope for early withdrawals. Identify two financial disadvantages of waiting an extra 4 years before offering the deposit to buy a first home. (4 marks) 2.4 How will Miriam's efforts to save for a deposit be affected if there is a sharp rise in interest rates which causes a fall in house prices? (4 marks)
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