You Have Five Years Until You Need to Take Your

question 70

Essay

You have five years until you need to take your money out of your investments to make a planned expenditure. Right now bonds are promising an 8 percent return. You buy a five-year duration bond. After you buy the bond,interest rates fall to 6 percent and stay there for the full five years. You reinvest the coupons and earn 6 percent. Will your realized return be more or less than the originally promised 8 percent? Explain.

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Definitions:

Compressed Workweek

A work schedule that allows employees to work full-time hours in fewer days than a traditional workweek.

Job Satisfaction

The level of contentment employees feel regarding their job, which can impact their motivation, performance, and likelihood of remaining with the company.

Job Sharing

An employment arrangement where two or more individuals share the responsibilities and duties of a single full-time job.

Retirement

The period in one's life after concluding professional or working life, often marked by receiving pensions.