6.7 Investments

Muriel purchases a $3,000 bond with a maturity of 4 years at a fixed coupon rate of 5.5% paid annually. How much is Muriel paid each year, and how much does she receive on the maturity date?

Haniah buys stock in the ABC company, investing a total of $13,000. She expects the stock to grow, through stock price increase and reinvestment of dividends, by 12.3% per year and compounded annually. If she leaves that money invested, how much will the stocks be worth in 20 years?

1. Find the percent yield for a stock with a price of $30.69 and an annual dividend of $1.48.
2. Find the percent yield for a stock with a price of $62.25 and an annual dividend of $1.76.

Darma owns 150 shares of stock in the GDW company. This quarter, GDW is paying $0.87 per share in dividends. How much will Darma earn in dividends this quarter?

Vincent buys 100 stocks in the REM company for $21.87 per share. One year later, he sells those 100 shares for $29.15 per share.

1. How much money did Vincent make?
2. What was his return on investment for that one year?

Kaitlyn has analyzed her $12,862.50 quarterly budget using the 50-30-20 budget philosophy, and sees she should be saving or paying down debt with $2,572.50 per quarter. She decides to invest $1,300 quarterly a mutual fund that reports an average return of 11.62% over the 18-year life of the mutual fund. Assuming that this interest rate continues, and is compounded quarterly, how much will her mutu…

Kaitlyn wants to retire with $1,500,000 in her mutual fund account. She will invest for 35 years. The mutual fund reports an average return of 11.62% over the 18-year-long life of the mutual fund. Assuming that this interest rate continues, and is compounded quarterly, how much will she need to pay annually into her mutual fund to reach her goal?

Recall the example, in which Muriel purchased a $3,000 bond with a maturity of 4 years at a fixed coupon rate of 5.5% paid annually. What was Muriel’s return on investment?

Recall the example, in which Muriel purchased a $3,000 bond with a maturity of 4 years at a fixed coupon rate of 5.5% paid annually. What was Muriel’s annual return on investment? Interpret this as compound interest.

Haniah buys stock in the ABC company, investing a total of $13,000. After 20 years, the stock is worth $132,293.49, including reinvestment of dividends.

1. What is Haniah’s return on investment?
2. What is Haniah’s annual return?

Richard is saving for new siding for his home. He and his partner believe they will need $37,500 in 10 years to pay for the siding. How much should they invest yearly in a mutual fund they believe will have an annual interest rate of 12%, compounded annually, in order to reach their goal?

Which type of IRA, Roth or traditional, has an income limit for its use?

Alice signs up for her employer-based 401(k). The employer matches any 401(k) contribution up to 6% of the employee salary. Alice’s annual salary is $51,600.

1. What is the most money that Alice can deposit that will be fully matched by the company?
2. How much total will be deposited into Alice’s account if she deposits the full 6%?
3. How much return does Alice earn if she deposits exactly 6% in her 401…

DeJean begins depositing $300 per month from his paycheck each month in his employer-based 401(k) account. The employer matches this deposit as it falls below their matching threshold. DeJean expects the return to average 10% per year, compounded annually.

1. How much will DeJean’s account be worth if he keeps making those payments for 30 years?
2. What will his account be worth without the matching fu…