If you invest $500 today, what will be the future value in 3 years, if the interest rate is 8% per annum?
These exercises demonstrate the application of various investment concepts and techniques, including present value, future value, return on investment, and portfolio management. By understanding these concepts, investors can make informed decisions and achieve their financial goals.
Year 1: $100 Year 2: $120 Year 3: $150
Using the future value formula:
Where: FV = future value PV = present value = $500 r = interest rate = 8% = 0.08 n = number of years = 3
Stock A: 40% of the portfolio, with an expected return of 12% Stock B: 60% of the portfolio, with an expected return of 15%