Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

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

Suppose someone offers you the following gamble you pay 7

Suppose someone offers you the following gamble: You pay $7 and toss a coin. If the coin comes up heads, he pays you $10, and if tails comes up, he pays you $5. You in turn get the idea of offering another person a coin ...

The us treasury bill is yielding 185 percent and the market

The U.S. Treasury bill is yielding 1.85 percent and the market has an expected return of 7.48 percent. What is the Treynor ratio of a correctly-valued portfolio that has a beta of 1.33 and a variance of .0045? .056.069.0 ...

Choose a conceptual variable that can be considered to be a

Choose a conceptual variable that can be considered to be a trait of interest to you, and (after conducting a literature review) create a 20-item Likert scale to assess it. Administer the scale to at least 20 people. Com ...

1 define the following termsa optionb callc putd contingent

1. Define the following terms: a. Option b. Call c. Put d. Contingent claim 2. What are the similarities and differences between options and warrants? 3. What variables are important in determining call option prices? 4. ...

Company checkpoint issued bonds at a discount where each

Company Checkpoint issued bonds at a discount where each $1,000 face(par) bond was issued for $900. The coupon rate is stated as 3.75%. Company Delta issued its bonds at par (each $1,000 of bond was issued for $1,000) wi ...

Explain why a call option with zero exercise price is

Explain why a call option with zero exercise price is equivalent to the underlying stock, assuming no dividends on the stock during the life of the option? Why might two calls or puts alike in all respects but time to ex ...

You work for a company with no international experience

You work for a company with no international experience that has an efficient production method for small engines. A Vietnamese company approaches your CEO with a proposal to form a joint venture with your company in Vie ...

The cash conversion cycle is an important tool for the

The cash conversion cycle is an important tool for the financial manager in managing day-to-day operations of the firm. As an investor, knowing how the firm manages its CCC would provide useful insights about management' ...

Write a ten page essay about investnment the essay can be

Write a ten page essay about investnment. The essay can be about why is it so appealing to learn investment, what are some benefits of learning investment, who are some best investors in the world, what were my favorite ...

Connectix inc recently issued noncallable bonds that mature

Connectix Inc. recently issued noncallable bonds that mature in 10 years. They have a par value of $1,000 and an annual coupon of 7.5%. If the current market interest rate is 7.7%, at what price should the bonds sell?

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen