Ask Question, Ask an Expert


Ask Basic Finance Expert

13.1 Ray's Dilemma: Common Stocks or Mutual Funds?
Ray Sutton has worked in the management services division of Strategic Consultants for the past 5 years. He currently earns a n annual salary of about %95,000. At 33, he's still a bachelor and has accumulated about $60,000 in savings over the past few years. He keeps his savings in a money market account, where it earns about 3% interest. Ray wants to get "a bigger bang for his buck" and so has considered withdrawing $50,000 from his money market account and investing it I the stock market. He feels that such an investment can easily earn more than 3%. Cheryl Dodd, a close friend, suggest that he invest in mutual fund shares. Ray has approached you, his broker for advice.

1. describe to Ray the key reasons for purchasing mutual fund shares.
2. What special fund features might help Ray achieve his investment objectives?
3. What types of mutual funds would you recommend to Ray?
4. What recommendations would you make regarding Ray's dilemma about whether to go into stocks or mutual funds? describe.

13.2 Jennifer Ponders Mutual Funds
Jennifer Hollins is the director of a major charitable organization in Lexington, KY. A single mother of one young child, she earns what could best be described as a modest income. Because charitable organizations aren't known for their generous retirement programs, Jennifer has decided it would be best for her to do a little investing on her own. She'd like to set up a program to supplement her employer's retirement program and, at the same time, provide some funds for her child's college education (which is still 12 yrs away). Although her income is modest, Jennifer feels that with careful planning she could probably invest about $350 a quarter, and she hopes to increase this amount over time. Jennifer now has about $15,000 in a bank savings account, which she's willing to use to kick off this program. In view of her investment objectives, she isn't interested in taking a lot of risk. Because her knowledge of investment extends no farther than savings accounts, series EE bonds, and a little bit about mutual funds, she approaches you for investment advice.

1. In view of Jennifer's long-term investment goals, do you think mutual funds are an appropriate investment vehicle for her?
2. Do you think she should use her $15,000 savings to start off a mutual fund investment program?
3. What type of mutual fund investment program would you set up for Jennifer? In your answer, discuss they types of funds you'd consider, the investment objectives you'd set, and any investment services (such as withdrawal plans) you'd seek. Would taxes be an important considerations in your investment advice? describe.
4. Do you think some type of real estate investment would make sense for Jennifer? If so, what type would you suggest? describe.


Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M929140

Have any Question? 

Related Questions in Basic Finance

Abc company claims that the proportion of its employees

ABC Company claims that the proportion of its employees investing in individual investment accounts is higher than national proportion of 50%. A survey of 100 employees in ABC Company indicated that 58 of them have inves ...

A stock is expected to grow 3 per year what is the price of

A stock is expected to grow 3% per year. What is the price of this stock if the required return is 9%? The stock is expected to pay a $1.4 dividend next year.

In formulating key concept exercise consider the following

In formulating Key Concept Exercise, consider the following questions: What are the benefits of just-in-time (JIT) techniques? What types of organisations use JIT techniques? Should things change if they are running smoo ...

You borrow 75000 for 30 years at 11 interest compounded

You borrow $75,000 for 30 years at 11% interest compounded annually. 1. The value of the property is $100,000, PGI= $20,000, vacancy rates are 8%, and operating expenses are $81,000. 2. Calculate the annual debt service. ...

David wheelock of the federal reserve bank of st louis

David Wheelock of the Federal Reserve Bank of St. Louis describes the following episode at the beginning of the Great Depression: Following the stock market crash [of October 1929], the Federal Reserve Bank of New York u ...

Explain why end users who conduct their risk management

Explain why end users, who conduct their risk management operations in the treasury department, should not require the treasury department to be a profit center ? Distinguish the typical objectives of a dealer engaging i ...

1 what factors must one consider when deciding on the

1. What factors must one consider when deciding on the appropriate underlying asset for a hedge? 2. For each of the following hedge termination dates, identify the appropriate contract expiration. Assume the available ex ...

A property is available for sale that could normally be

A property is available for sale that could normally be financed with a fully amortizing $80,000 loan at a 10 percent rate with monthly payments over a 25-year term. Payments would be $726.96 per month. The builder is of ...

According to an article in the wall street journal in june

According to an article in the Wall Street Journal in June 2010, "Treasurys should continue to benefit from the flight-to-safety bid that caught hold this spring on concerns about debt-laden euro-zone nations and the hea ...

Compare and contrast the physical and risk characteristics

Compare and contrast the physical and risk characteristics of Treasury debt securities with municipal securities. What are the advantages and disadvantages of each for the borrower? What are the advantages and disadvanta ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro