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

question 28

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.
-How much can Alex expect to have in his risky account at retirement?

• A)$1,400,326
• B)$1,309,529
• C)$1,543,781
• D)$1,224,651
• E)$1,345,886

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Definitions:

Maltase

An enzyme that breaks down maltose into glucose, aiding in carbohydrate digestion.

Digestive Organ

An organ that is part of the digestive system and helps in the breakdown and absorption of food, such as the stomach, liver, or intestines.

Optimum Temperature

The temperature at which a specific enzymatic or metabolic process achieves its highest rate of efficiency.

Optimum PH

The specific pH level at which an enzyme or biological process operates with maximum efficiency.