Need help with the following problems:

Chapter 2 Problems:

4. a. Someone in the 36 percent tax bracket can earn 9 percent annually on her investments in a tax-exempt IRA account. What will be the value of a one-time $10,000 investment in 5 years? 10 years? 20 years?

b. Suppose the preceding 9 percent return is taxable rather than tax-deferred and the taxes are paid annually. What will be the after-tax value of her $10,000 investment after 5 , 10, and 20 years?

5. a. Someone in the 15 percent tax bracket can earn 10 percent on his investments in a tax-exempt IRA account. What will be the value of a $10,000 investment in 5 years? 10 years? 20 years? b. Suppose the preceding 10 percent return is taxable rather than tax-deferred. What will be the after-tax value of his $10,000 investment after 5, 10, and 20 years?

Chapter 3 Problems:

4. The following information is available concerning the historical risk and return relationships in the U.S. capital markets:

U.S. CAPITAL MARKETS TOTAL ANNUAL RETURNS, 19902011

Investment CategoryArithmetic MeanGeometric MeanStandard Deviation of Return

Common stocks10.28%8.81%16.9%

Treasury Bills3.54%3.49%3.2%

Long Term government bonds 5.10%4.91%6.4%

Long term corporate bonds5.95%5.65%9.6%

Real estate9.49%9.44%4.5%

a.Explain why the geometric and arithmetic mean returns are not equal and whether one or the other may be more useful for investment decision making.

b.For the time period indicated, rank these investments on a relative basis using the coef-ficient of variation from most to least desirable. Explain your rationale.

c.Assume the arithmetic mean returns in these series are normally distributed. Calculate the range of returns that an investor would have expected to achieve 95 percent of the time from holding common stocks.

5. You are given the following long-run annual rates of return for alternative investment instruments:

U.S. Government T-bills3.50%

Large-cap common stock11.75

Long-term corporate bonds5.50

Long-term government bonds4.90

Small capitalization common stock 13.10

The annual rate of inflation during this period was 3 percent. Compute the real rate of return on these investment alternatives.