Name ECONOMIC DETECTIVE Sylvestor and Frugala Investor INVESTIGATION 1 Frugala immediately sends Sylvestor to the bank w

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Name Economic Detective Sylvestor And Frugala Investor Investigation 1 Frugala Immediately Sends Sylvestor To The Bank W 1 (160.71 KiB) Viewed 36 times

Name ECONOMIC DETECTIVE Sylvestor and Frugala Investor INVESTIGATION 1 Frugala immediately sends Sylvestor to the bank with his bonus check. There he places all $10,000 in a savings account, promising himself not to settle for an interest rate of 2.9 percent for long. The bank's financial adviser suggests that Sylvestor consider certificates of deposit or possibly mutual funds, and Frugala suggests that he buy more life insurance. Issue December is approaching, and Sylvestor Investor is anticipating a year-end bonus of $10,000. Sylvestor and his wife, Frugala, agree to invest the money rather than spend it. Sylvestor is so eager that he begins day trading in November, losing almost the whole month's paycheck Alarmed, Frugala packs up his computer and sends it to her cousin Wilder in Australia's Outback. When his bonus arrives, Sylvestor has to find other ways to put his money to work. INVESTIGATION 2 Frugala is pleased when Sylvestor puts $2,000 into 10-year state bonds and $3,000 into 5-year AAA-rated bonds in Steady Hand Hardware, Inc. He buys the four state bonds at a 5 percent interest rate and the three Steady Hand bonds at a 6.5 percent rate. Sylvestor also buys $1,500 worth of blue chip stocks, and $800 worth of stock in a promising new sportswear company that reinvests its earnings in new growth. 1. (a) What the maturity for each of the bond groups Sylvestor buys? Class (b) The coupon rate? (c) The par value? Date 1. What financial intermediaries does Sylvestor use or consider using? 2. Where would Sylvestor go to talk to a stockbroker? 3. If Sylvestor waits a year, how much money will he have available to invest? 2. (a) Which of Sylvestor's stocks are traded over the counter? (b) on the NYSE? 3. (a) Which of Sylvestor's new investments are municipal bonds? (b) Corporate bonds? 4. For which bond purchase did Frugala probably consult Standard & Poor's or Moody's? 5. From which stock may Sylvestor expect capital gains rather than dividends?