Business, 04.04.2020 08:35 justnbri

Fees in 1st year Suppose Adrian and Clemens each Invest $10,000. Adrian Invests in an actively managed mutual fund that has an annual expense ratio (a fee charged by the investment manager of 1.3% Clemens Invests in a passively managed index fund linked to the S&P 500 that has an expense ratio of 0.2%. Both Investments earn a 7% rate of return

1. How much does each investor make on his investment with the 7% rate of return?
2. How much does Adrian pay in fees for his actively managed mutual fund? .
3. How much does Clemens pay in fees for the index fund?
4. At the end of the year, what's the total value (AFTER FEES) of Adrian's mutual fund?
5. What's the total value (AFTER FEES) of Clemens's index fund?
6. How much more value does Clemens's investment generate than Adrian's in one year's time?

Answers: 1

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Answer from: misa11234

Task 1:

The answer is $700.

Task 2:

The answer is $130.

Task 3:

The answer is $20.

Task 4:

The answer is $10,570.

Task 5:

The answer is $110.

Explanation:

Task 1:How much does each investor make on his investment with the 7% rate of return?Solution:

Adrian & Clemens makes [$10,000*0.07] on their investment = $700.

Task 2:How much does Adrian pay in fees for his actively managed mutual fund?Solution:

Adrian owes to his broker = (10000*.013) = $130

Task 3:How much does Clemens pay in fees for the index fund?Solution:

Clemens owes to his broker= ($10000*.002) = $20

Task 4:At the end of the year, what's the total value (AFTER FEES) of Adrian's mutual fund?Solution:

Value of Adrian's stock = $10000+$570 (net of brokerage) = $10,570

Task 5:What's the total value (AFTER FEES) of Clemens's index fund?Solution:

Value of clemens' stock = $10000+$680 (net of brokerage) = $10,680

Task 6:How much more value does Clemens' investment generate than Adrian's in one year's time?Solution:

Clemens investment makes ($680-$570) than adrian's investment = $110

Answer from: Quest

c is the correct answer.

Answer from: Quest

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans.

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.

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Fees in 1st year Suppose Adrian and Clemens each Invest $10,000. Adrian Invests in an actively manag...

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