Essay
How much is an investor's tolerance for risk worth over a long horizon? Calculate the difference in accumulation in real terms for an investor who initially invests $25,000 and ignores it for 20 years in either a long-term Treasury bond portfolio or a portfolio of diversified common stocks. Assume the historic real returns of 2.1% annually for bonds and 9.3% for common stocks.
Correct Answer:
Verified
Bond Portfolio:
$25,000(1.021)20 = $37,883...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
$25,000(1.021)20 = $37,883...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q17: Contrast the Dow Jones Industrial Average and
Q18: Industries that generally perform well when other
Q19: If the stock market return in 2014
Q23: What is the standard deviation of a
Q24: What percentage return is achieved by an
Q25: Most of the beneficial effects of diversification
Q49: Averaging the deviations from the mean for
Q50: Every additional stock added to a portfolio
Q55: Over a 20-year period an investment of
Q56: How is it possible for real rates