Suppose That You Want to Create a "Retirement Party Fund

question 9

Multiple Choice

Suppose that you want to create a "retirement party fund" for yourself and place $50 in a bank account for each of the next 20 years.If that account earns an annual rate of return of 7%,how much will be in your retirement party fund at the end of the twentieth year?

• A)$1,529.70
• B)$2,679.22
• C)$1,032.57
• D)$2,049.77

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Definitions:

Dividend Yield

A measurement of the annual dividends a firm issues in relation to its share price.

Capital Gains Yield

The price appreciation component of the total return from an investment, typically expressed as a percentage.

Dividend Models

Mathematical formulations that aim to estimate the real value of a company’s stock based on its expected dividend payments and growth.

Financial Asset

Any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset, or a contractual right to exchange financial instruments on potentially favorable terms.