Alex Goh Is 39 Years Old and Has Accumulated $128,000

question 22

Multiple Choice

Alex Goh is 39 years old and has accumulated $128,000 in his self-directed defined contribution pension plan.Each year he contributes $2,500 to the plan, and his employer contributes an equal amount.Alex thinks he will retire at age 62 and figures he will live to age 86.The plan allows for two types of investments.One offers a 4% risk-free real rate of return.The other offers an expected return of 11% and has a standard deviation of 37%.Alex now has 25% of his money in the risk-free investment and 75% in the risky investment.He plans to continue saving at the same rate and keep the same proportions invested in each of the investments.His salary will grow at the same rate as inflation. Of the total amount of new funds that will be invested by Alex and by his employer on his behalf, how much will Alex put into the safe account each year; how much into the risky account?

• A)$2,500; $2,500
• B)$3,200; $1,800
• C)$3,000; $2,000
• D)$1,250; $3,750

---

Definitions:

Social Development

The process by which individuals learn to interact with others, understand social norms, and develop relationships, critical for integrating into society.

Emotional Development

The process of learning to recognize, express, and manage feelings at different stages of life.

Eye Contact

The act of looking directly into another person's eyes, which can be a form of nonverbal communication indicating various emotions and intentions.

Placenta

An organ that develops in the uterus during pregnancy, providing oxygen and nutrients to the growing fetus while removing waste products from the fetus's blood.