2. Your friend wishes to begin saving, but he finds he continually spends the amount he...

2. Your friend wishes to begin saving, but he finds he continually spends the amount he plans to save each month on impulse purchases.

a. Would you say your friend is being rational? Why or why not?

b. Is there any plan you could suggest to your friend to help him adjust his behaviour to better meet his goals?

Solutions

Expert Solution

Your friend wishes to begin saving, but he finds he continually spends the amount he plans to save each month on impulse purchases.

a. Would you say your friend is being rational? Why or why not?

Answer NO i would not say he is being ratioonal becuase rational is when he save the spending for the goal he want to get .He is saving his money for meeting a goal and having a continous impulse purchase will not make him to get to his goal so he is not being rational otherwise .

b. Is there any plan you could suggest to your friend to help him adjust his behaviour to better meet his goals?

Answer I would suggest him to invest his saving on the mutual find which give high interest rate for reaching its goal .In diect growth policy of mutual fund he can invest his little saving and he can withdraw anytime after the year for whatever he need to buy .This will not only save his money from impulse pirchase but will also make his behavior to change in investing his money on prop0er direction

HAVE A GOOD DAY !

Rahul Sunny answered 6 months ago

Next > < Previous

Related Solutions

Q2. A friend of yours wants to begin selling maple syrup that he makes on his...

Q2. A friend of yours wants to begin selling maple syrup that he makes on his forest property. He has asked you, as a marketing student, if he should sell his maple syrup product through retail or wholesale channels. a) Explain the difference and pros/cons of each marketing channel for your friend and suggest a channel based on your knowledge. Also include promotion mix strategies for your friend’s new business. b) What are the main (marketing) concerns you have about...

Your client is 22 years old; and she wants to begin saving for retirement, with the...

Your client is 22 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $4,000 per year; and you advise her to invest it in the stock market, which you expect to provide an average return of 6% in the future. a. If she follows your advice, how much money will she have at 65? Round your answer to the nearest cent. b. How much will she...

Your client is 38 years old; and she wants to begin saving for retirement, with the...

Your client is 38 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $3,000 per year; and you advise her to invest it in the stock market, which you expect to provide an average return of 7% in the future. If she follows your advice, how much money will she have at 65? Round your answer to the nearest cent. $ How much will she have...

You begin saving for your retirement through an ordinary annuity that is deposited into a mutual...

You begin saving for your retirement through an ordinary annuity that is deposited into a mutual fund over the next 30 years (30 payments in total). Assume you leave your funds in this mutual fund throughout your lifetime and it earns 12% per year. Once you retire you expect to live for an additional 25 years. In retirement you would like to receive an annuity due for these 25 years of $200,000 per year. How much must you deposit into...

Stewart is saving for a holiday. He deposits a fixed amount every quarter in a bank...

Stewart is saving for a holiday. He deposits a fixed amount every quarter in a bank account with an EAR of 15%. If this account pays interest every month then how much should he save from each quarterly paycheck in order to have $20,000 in the account in four years' time? Show work Select one: a. 861.38 b. 1,143.79 c. 949.47 d. 934.90

Your friend tells you that she wants to start saving for retirement by investing in the...

Your friend tells you that she wants to start saving for retirement by investing in the stock market. Given that you have taken this finance class, she asks you for advice about what stocks she should buy. What would you tell her?

2. The amount of time that a drive-through bank teller spends on a customer is a...

2. The amount of time that a drive-through bank teller spends on a customer is a random variable with a mean minutes and a standard deviation minutes. If a random sample of 64 customers is observed, find the probability that their mean time at the teller’s window is: a) At most 2.7 minutes b) more than 3.5 minutes

Your client is 36 years old. She wants to begin saving forretirement, with the first...

Your client is 36 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $12,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future.If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent. $How much will...

Your client is 24 years old. She wants to begin saving forretirement, with the first...

Your client is 24 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $7,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future.a. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.b. How much...

Your client is 26 years old. She wants to begin saving for retirement, with the first...

Your client is 26 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8000 per year and you advise her to invest it in the stock market, which you expect to provide an expected return of 10% in the future. A) If she follows your advice, how much money she will have at 65? B) She expects to live for 20 years after she retires at 65....

Subjects