Figure 3.3111105123.21110.25136.7631115.7625151.807041121.550625168.50581551127.62815625187.0414552161134.0095640625207.6160152899140.7100422656230.4537769718147.7455443789255.8036924386155.1328215979283.9420986069162.8894626777315.1757294537171.0339358116349.8450596936179.5856326022388.3280162599188.5649142323431.0440980484197.9931599439478.4589488338207.8928179411531.0894332055218.2874588382589.5092708581229.2018317801654.3552906525240.6619233691726.3343726242252.6950195376806.2311536129265.3297705144894.9165805103278.5962590402993.3574043665292.52607199221102.6267188468307.15237559181223.9156579199322.50999437141358.5463802911338.63549408991507.9864821232355.56726879441673.8649951567373.34563223421857.9901446239392.01291384592062.3690605326411.61355953822289.2296571912432.19423751512541.0449194822453.80394939082820.5598606252476.49414686043130.821445294500.31885420343475.2118042763525.33479691353857.4851027467551.60153675924281.8084640489579.18161359724752.8073950942608.1406942775275.6162085546638.54772899095855.9339914956670.47511544046500.0867305601703.9988712125

$ 100 invested in stocks, earning 11% a year, is worth more than seen times as much at the end of 40 years than $ 100 invested in bonds, earning 5% a year.The compounding effect increasesas the time horizon increases.StocksT. BondsCompounding PeriodsFuture Value of $ 100Figure 3.3: Effect of Compounding Periods: Stocks versus T.Bonds

Forecasted ValueHolding PeriodStocksT. Bonds1$111.00$105.002$123.21$110.253$136.76$115.764$151.81$121.555$168.51$127.636$187.04$134.017$207.62$140.718$230.45$147.759$255.80$155.1310$283.94$162.8911$315.18$171.0312$349.85$179.5913$388.33$188.5614$431.04$197.9915$478.46$207.8916$531.09$218.2917$589.51$229.2018$654.36$240.6619$726.33$252.7020$806.23$265.3321$894.92$278.6022$993.36$292.5323$1,102.63$307.1524$1,223.92$322.5125$1,358.55$338.6426$1,507.99$355.5727$1,673.86$373.3528$1,857.99$392.0129$2,062.37$411.6130$2,289.23$432.1931$2,541.04$453.8032$2,820.56$476.4933$3,130.82$500.3234$3,475.21$525.3335$3,857.49$551.6036$4,281.81$579.1837$4,752.81$608.1438$5,275.62$638.5539$5,855.93$670.4840$6,500.09$704.00

Sheet2

Sheet3