In the case, George had Marcy and Dan decide whether they would rather have $1 million today or receive a penny that doubled in price every day for 30 days. How much would Dan and Marcy have if they took the penny option?

Words: 308
Pages: 2
Subject: Uncategorized

Tasks:

Financial planning (savings and retirement)
Compound interest and how it works
Risk tolerance in investing
Analyzing data when investing

Questions

1. In the case, George had Marcy and Dan decide whether they would rather have $1 million today or receive a penny that doubled in price every day for 30 days. How much would Dan and Marcy have if they took the penny option?

2.George told Dan and Marcy that there is a relationship between the amount of risk in an investment and the amount of potential reward in an investment. In your own words and experience, give an example that highlights this idea.

3. Imagine that you plan to retire at age 65. What risk profile (risky, moderate risk, conservative) would you most likely consider at age 25? What about at age 35? What about at age 55?

4. Look at Exhibit 5, Growth Performance for Various Investments over a 20-Year History. The line chart shows the returns on different investment types for an investment of $100,000. Without doing any calculations, suggest an appropriate investment for each of your answers in question 3.

5. Look at the different plans that George created for Dan and Marcy (Exhibit 3). Without doing any calculations, determine which plan you believe is best for them. Give two reasons supporting your choice.

6. Consider how you have viewed savings and retirement in the past. Have you made good decisions in preparing for retirement? If not, what can you do differently in the future?

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