A Pension Plan Gives You 12 Possible Funds in Which

question 56

Short Answer

A pension plan gives you 12 possible funds in which to invest, but you are allowed to hold four at any given point in time. How many possible combinations of the 12 funds could you have in your portfolio?

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Definitions:

Semiannually

Semiannually means occurring twice a year, typically at six-month intervals.

Discounted

A financial term referring to an instrument, transaction, or cash flow that is valued in present terms, taking into account the time value of money.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, used in the evaluation of investment opportunities.

Cash Flow Stream

A series of cash inflows and outflows over a period of time, often used in financial models to determine investment viability or project returns.