Question

7.What is an​ ETF? How do ETFs differ from​ open-end stock​ funds?

	A.	ETFs are similar to​ open-end mutual funds except they can be traded like stocks throughout the day. ETFs are designed to mimic particular stock indexes or sectors and are not actively managed.​ Closed-end stock funds only trade after the markets close and are traded at net asset value.
	B.	ETFs are similar to​ closed-end mutual funds except they can be traded like stocks throughout the day. ETFs are designed to mimic particular stock indexes or sectors and are not actively managed.​ Open-end stock funds only trade after the markets close and are traded at net asset value.
	C.	ETFs are similar to​ closed-end mutual funds except they can be traded like stocks throughout the day. ETFs are designed to mimic particular stock indexes or sectors and are actively managed.​ Open-end stock funds only trade after the markets close and are traded at net asset value.
	D.	ETFs are similar to​ closed-end mutual funds except they cannot be traded like stocks throughout the day. ETFs are designed to mimic particular stock indexes or sectors and are not actively managed.​ Open-end stock funds only trade during the day and are traded at net asset value.

8.Why is a high risk premium an advantage for the​ investor?

	A.	A.the value of the investment has a relatively low chance of experiencing a large loss.
	B.	B.the value of the investment has a relatively high chance of experiencing a large loss.
	C.	C.it represents a low rate of return beyond the​ risk-free rate.
	D.	D.it represents a higher rate of return beyond the​ risk-free rate.

9.

Suppose you wish to retire forty years from today. You determine that you need $50,000 per year once you retire, with the first retirement funds withdrawn one year from the day you retire. You estimate that you will earn 6% per year on your retirement funds and that you will need funds up to and including your 25th birthday after retirement. How much do you need to save each year over the next 40 years to achieve your goal?

Answer 1

Q.7)

The answer for the same would be that ETFs are similar to​ open-end mutual funds except they can be traded like stocks throughout the day. ETFs are designed to mimic particular stock indexes or sectors and are not actively managed.​ Open-end stock funds only trade after the markets close and are traded at net asset value.

Q.8)

The answer would be :

It represents a higher rate of return beyond the risk-free rate.

Q.9)

For this Question the annual payment = - $50,000

Future value of investment = 0

number of periods = 25

Interest = 6%

$\therefore$ the present value of the fund you need in your retirement account would be = $639,167.80

Now in order to have that much amount in your retirement fund by the time you retire in 40 years considering that you will earn the same 6% interest on your retirement account.

Future Value = $639,167.80

Number of periods = 40

Interest = 6%

Present value of the fund = $0

$\therefore$ annual payment required = $4130