Traditionally, tables have been prepared showing how long IRA funds will last based on rates of return and annual withdrawal rates. These tables, however, assume constant returns over the projection period
Many financial planners are now using a technique that allows for fluctuations in market returns. A computer is programmed to estimate how long funds will last under many different return scenarios and to determine the probability that funds will last until a specified age. This technique is called
A) decision-tree analysis.
B) sensitivity analysis.
C) computer simulation.
D) cost-benefit analysis.
Answer: C
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A firm has a single issue of a zero coupon debt that promises to pay $40 in 5 years, and the A0 = $50, r = 4%, ? = 12%, and ? = 0. If the asset has a 5% chance of total default, what is the value of the debt?
A) $30.83 B) $42.68 C) $55.21 D) $62.41
Richard was recently offered a position as vice president of marketing at a national retail chain. As a top executive at the firm, Richard will most likely be compensated with all of the following EXCEPT ________
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