Determine your portfolio's holding period return (HPR - accounting for both capital and dividend changes) over the five year investment period using stock. Based on your initial $1,000,000 investment
Module 3 LASA
Introductions Paragraph: (3-4 sentences, APA): REWORD THIS PARAGRAPH
A common component of investing money is to take advantage of a financial institution’s willingness to pay compound interest. Compound interest is basically interest paid on a deposit that continually accumulates interest. In general, the formula for compound interest can be represented by the following exponential function:
In this formula, P(t) represents the total money in the account after t years given the interest rate k which is compounded continuously.
| Initial Investment | Interest | Time: 1 year | Tine: 5years | Time: 10years |
| 1000 | k= 0.005 | 1000 * e^0.005*1 1000*e^0.005 1000*1.00501= $1,005.01 | 1000*e^0.005*5 1000*e^0.025 1000*e1.0251315 $1,025.32 | 1000*e^0.005*10 1000*e^0.05 $1,051.27 |
YOU NEED TO CONTINUE THE CHART. * is to multiply and ^ is exponent
Paragraph II: Answer the following questions as questions. Use complete sentences in APA Form. 4- 5 sentences
What effect did changing the interest rate have on the rate at which your investment grew?
Assume that this money is being invested in a savings account. Are the interest rates we selected realistic for such an account today?Â
Consider the formula we used to determine the future value of our deposit. Is this formula a realistic approximation of what we could expect from an investment or are there other issues or factors that must be considered?
Paragraph III: Answer the following questions as questions. Use complete sentences in APA Form. 4- 5 sentences
Besides savings accounts, what other kinds of investment accounts or programs are typically offered at your bank? Do these accounts use compound interest? What are the typical interest rates for these accounts?
Use your textbook or another reference to research how to calculate simple interest. Given what you know about compound and simple interest, which would you prefer that your investment programs were based upon? Why?
