1. List the following asset classes/instruments in order of their riskiness. The first class being the least risky and the final listed being the riskiest.
- Large- Cap Stock
- U.S. Treasury Bond
- Junk Bond
- Small- Cap Bond
- Corporate Bond - credit rating below AAA
- Money Market Mutual Fund
2. Ernst would like to purchase a specific house in Los Angeles. The house costs exactly $150,000 today but housing prices in Los Angeles are expected to increase by 8.5 percent per year for the next 20 years. He plans to make equal amount of monthly payments into a saving account for the next 20 years, starting one month from today, in order to save enough money. If his account earns 12 percent annual interest, what should the amount of each deposit be?
$1,205,42
$935.86
$775.14
$1,020.50
$525.12