Question
Solve manually using formulas/actuarial symbols. Show complete solutions. Reinvestment rate: An investor makes a single deposit of 10,000 into fund A for 10 years which
Solve manually using formulas/actuarial symbols. Show complete solutions.
Reinvestment rate: An investor makes a single deposit of 10,000 into fund A for 10 years which earns a 6% effective rate of interest payable directly to the investor each year. During the first 5 years, the interest payments can only be reinvested into Fund B which earns 4% effective over the entire 10-year period. During the second 5 years, the interest payments can only be reinvested into Fund C which earns 5% effective. Find the total accumulated value in Funds A, B and C combined at the end of 10 years and the overall yield rate achieved by the investor.
Interest rate: At an annual effective interest rate i, an investment of 1 unit doubles in a years, triples in b years and grows to 5 in c years.
a.) To what amount does 10 grow in 3a + 2b years?
b.) In how many years (in terms of a, b, c) will 1000 grow to 1200?
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