DATA and SOLUTIONS
ASSUME:
Y=15 years
G=$80,000
T=3 (5 year intervals)
k=2 (stock/bonds)
Returns (5 year):
Scenario A: r(stock) = 1.25 r(bonds)= 1.14
Scenario B: r(stock) = 1.06 r(bonds)= 1.12
Solution:
PERIOD SCENARIO STOCK BONDS
1 1-8 41.5 13.5
2 1-4 65.1 2.17
2 5-8 36.7 22.4
3 1-2 83.8 0
3 3-4 0 71.4
3 5-6 0 71.4
3 7-8 64.0 0
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