Math Problem Statement
Betty and Bob have $250,000 to invest in a 8-year ZCB yielding 12% per annum compounded semiannually and the stock market. Assuming that the stock market investment can be worthless at the end of the 8 years, how much money should be invested in each to guarantee an account value of at least $250,000 at the end of 8 years?
Solution
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Math Problem Analysis
Mathematical Concepts
Compound Interest
Zero-Coupon Bonds
Investment Strategy
Formulas
Future Value of a Zero-Coupon Bond: F = P(1 + r/n)^(nt)
Investment Distribution: Total Investment = ZCB Investment + Stock Investment
Theorems
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Suitable Grade Level
University Level (Finance/Mathematics)
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