2014 AM Exam - Question 1

[PierreCFA]

The question A asks to justify 2 reasons that Crusoes have a below-average risk tolerance

My answer is: they need to finance their daughter’s university tuition which costs 60k. Is it a good reason?

The question C asks to identify 2 options available to the Crusoes that could allow them to retire in 4 years.

My answer is: don’t finance the university tuition of their daughter to increase their portfolio value. I don’t know why it can’t be an option.

Thanks

[S2000magician]

@PierreCFA

The question A asks to justify 2 reasons that Crusoes have a below-average risk tolerance

My answer is: they need to finance their daughter’s university tuition which costs 60k. Is it a good reason?

No.

It says that they _ plan _ to, not that they need to.

@PierreCFA

The question C asks to identify 2 options available to the Crusoes that could allow them to retire in 4 years.

My answer is: don’t finance the university tuition of their daughter to increase their portfolio value. I don’t know why it can’t be an option.

It’s not remotely enough.

Calculate their required rate of return if their asset base is increased by 60,000.