Genny Webb Is 27 Years Old and Has Accumulated $7,500

question 67

Multiple Choice

Genny Webb is 27 years old and has accumulated $7,500 in her self directed defined contribution pension plan. Each year she contributes $2,000 to the plan, and her employer contributes an equal amount. Genny thinks she will retire at age 63 and figures she will live to age 90. The plan allows for two types of investments. One offers a 3% risk free real rate of return. The other offers an expected return of 12% and has a standard deviation of 39%. Genny now has 20% of her money in the risk free investment and 80% in the risky investment. She plans to continue saving at the same rate and keep the same proportions invested in each of the investments. Her salary will grow at the same rate as inflation. Of the total amount of new funds that will be invested by Genny and by her employer on her behalf, how much will Genny put into the safe account each year; how much into the risky account?

• A) $1,500; $2,500
• B) $1,200; $1,800
• C) $800; $3,200
• D) $1,250; $2,750
• E) $1,400; $1,600

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Definitions:

Equal Status

A principle in social interactions suggesting that all participants are perceived to have the same importance or rank.

Institutional Support

Institutional support refers to the assistance and resources provided by organizations or institutions to individuals or groups, often to foster growth, development, or well-being.

Optimal Contact

A concept in social psychology that suggests there is an ideal level of interaction between individuals or groups to reduce prejudice and improve intergroup relations.

Stereotyping

The practice of attributing a fixed set of characteristics to members of a group, often oversimplifying their qualities or behaviors.