You Would Like to Have Enough Money Saved to Receive

question 71

Multiple Choice

You would like to have enough money saved to receive a growing annuity for 25 years, growing
At a rate of 4% per year, the first payment being $60,000 after retirement, so that you and your family can lead a good life. How much would you need to save in your retirement fund to achieve this goal? (assume that the growing perpetuity payments start one year from the date of
Your retirement. The interest rate is 12%) ?

• A) $1,500,000
• B) $632,390
• C) $452,165
• D) None of the above

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Definitions:

Currency Selection Return

Currency Selection Return refers to the gains or losses resulting from the active management decision of choosing to invest in currencies expected to appreciate relative to others.

Cross Border Fund

An investment fund that has the capability to invest in financial assets across different countries.

Benchmark

A standard or point of reference against which things may be compared or assessed, particularly in the financial markets to measure the performance of stocks or funds.

Interest Rate Parity Theory

Interest Rate Parity Theory is an economic theory which suggests that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.