DEFINITION of 'Constant Ratio Plan' Aconstant ratio plan is a strategic asset allocation strategy, or formula, which keeps the aggressive and conservative portions of a portfolio set at a fixedratio.
Answer:
In economics, a portfolio is a term for a specific set of stocks, bonds, shares, and other securities owned by an investor. In general, the investor seeks to compile and diversify a portfolio of securities that offers maximum profitability and at the same time is diverse, in order to minimize possible risks. In general, these types of portfolios are considered efficient, as they do not leave the investment risk tied to a single factor. However, these two goals often go against each other, so the composition of the portfolio means a certain compromise.
<u>Answer</u>
<u>Detailed Explanation </u>
To simply answer this, since .189 has three digits we are going to be inserting 999 as the denominator since it is a repeating decimal.
We could simplify the answer!
Therefore, the answer would simply be
<u>Always Remember </u>
In the future, always remember whenever you have a three digit decimal and the problem asks you to convert it into a fraction, you should always insert 1000 as the denominator (the numerator is basically the decimal without the decimal point) and simplify if necessary.
PV = P(1 - (1 + r)^-n) / r; where P is the periodic withdrawal = $100,000; r = rate = 5% = 0.05; n = number of periods = 20 years.
PV = 100000(1 - (1 + 0.05)^-20) / 0.05 = 100000(1 - 1.05^-20) / 0.05 = 100000(1 - 0.3769) / 0.05 = 100000(0.6231) / 0.05 = 100000(12.4622) = 1,246,221 ≈ $1,250,000
