o IT o 91. Suppose Jenna's ... Copy of Mortgage ... W Mortgage Analysis-... 10:22 AM 2/11/2021 AutoSave Off H Mortgage Analysis- Excel Project s21 m(2) - Protected View - Saved - O Saylor Samora SS File Home Insert Design Layout References Mailings Review View Help Share Comments PROTECTED VIEW Be carefulfiles from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing x PART 3 Bonds and Investment Options (10 points) Jenna believes she could easily set aside $2000 of her $45,000 salary. She is considering putting her savings in a stock fund. She just turned 22 and has a long way to go until retirement at age 65, and she considers this risk level reasonable. The fund she is looking at has earned an average of 8% over the past 15 years and could be expected to continue earning this amount, on average. While she has no current retirement savings, five years ago Jenna's grandparents gave her a new 30-year U.S. Treasury bond with a $10,000 face value. Jenna wants to know her retirement income if she both (1) sells her Treasury bond at its current market value and invests the proceeds in the stock fund and (2) saves an additional $2000 at the end of each year in the stock fund from now until she turns 65. Once she retires, Jenna wants those savings to last for 25 years until she is 90. 1. Suppose Jenna's Treasury bond has a coupon interest rate of 4.0%, paid semiannually, while current Treasury bonds with the same maturity date have a yield to maturity of 2.3567% C Focus Page 5 of 8 135 of 1669 words 18 1 + 90% IT 0 0 DI 91. Suppose Jenna's ... Copy of Mortgage ... W Mortgage Analysis-... 10:23 AM 2/11/2021 AutoSave Off Mortgage Analysis- Excel Project s21 m(2) - Word Saylor Samora SS File Home Insert Design Layout References Mailings Review View Help Share Comments X E Helvetica ~ A Aar As La 11 AaBbCcD AaBb Cc AaBb CcD IE Paste 1 Normal Editing Dictate 1 List Para... Body Text BI U ab X, X ADA Sensitivity Editor a v AL Paragraph Clipboard Font Styles Voice Sensitivity Editor 1. Suppose Jenna's Treasury bond has a coupon interest rate of 4.0%, paid semiannually, while current Treasury bonds with the same maturity date have a yield to maturity of 2.3567% (expressed as an APR with semiannual compounding). If she has just received the bonds 10th coupon, for how much can Jenna sell her treasury bond? 2. Suppose Jenna sells the bond, reinvests the proceeds, and then saves as she planned. If, indeed, Jenna earns an 7% annual return on her savings, how much could she withdraw each year in retirement? (Assume she begins with drawing the money from the account in equal amounts at the end of each year once her retirement begins.) 3. Should Jenna sell her treasury bond and invest the proceeds in the stock fund? Give one reason for and against the plan? Page 6 of 8 1669 words DX C Focus 10 + 70%
