You are planning to save for retirement over the next 44 years. To do this, you will invest $500 a month in a stock account and
$300 a month in a bond account, beginning one month from today. The return on the stock account is expected to be 9.6 percent, and the bond account will pay 5.4 percent. When you retire, you will combine your money into an account with a 5 percent return. You plan to make equal monthly withdrawals for 30 years from your retirement account beginning one month from your date of retirement. You also plan to leave $5 million as bequest to your beneficiaries. Calculate the amount of your monthly withdrawals.
As a result of an increase in the YTM, the price of the bond will fall $4677.19 from to $4593.67
Explanation:
The bonds are valued or priced based on the present value of annuity of interest payments and the present value of the principal. Based on the YTM of 7.8% the bonds are priced at,
coupon payment = 5000 * 0.067 *1/2 = $167.5
Semiannual YTM = 7.8 *0.5 = 3.9%
Semi annual periods to maturity = 8 * 2 = 16 periods
<span>Sometimes a reader may have a different opinion and may not agree with the bottom line statement of the author.When this disagreement arises a writer will have to establish common ground before the bottom line statement.</span>
A decrease in the supply of paprika would cause an increase in the price of both substitute goods. When the supply of paprika falls, the demand will be greater than what is available for sale and this would cause the sellers to raise it's price afterall it is now scarce.
Also as a substitute good, more people would begin to switch to buying cummin which would raise the demand for cummin. This increase in demand for cummin would then cause the price of cummin to go up.
