“Note 5:
Max stated that his investment risk tolerance is “moderately high.”
Max asked Depuy: “Beyond simply getting older, how can Jan and I lower our need to purchase life insurance?”
Max also asked Depuy to explain the relationship between his job and term life insurance.
Tom mentioned that he would like to follow in his mother’s career path and eventually become a tenured finance professor.
Jan stated that “Max and I are concerned about outliving our assets and running out of income to fund our retirement needs.”
5. Taking into consideration Comments 1, 2 and 5 and Note 5, Depuy is most likely to recommend that Max and Jan increase their exposure to:
A. risky assets. B. risk-free assets. C. lifetime income instruments.”
(Institute 366)
Institute, CFA. Level III 2013 Volume 2 Behavioral Finance, Individual Investors, and Institutional Investors. John Wiley & Sons (P&T), 6/18/2012. vbk:9781937537340#page(366).
Answer given is B risk free assets. Why wouldn’t it be C which is an annuity and will allay concerns about outliving their retirement?
This whole reading is full of BS (or unintuitive to me). (As others have pointed out), 80% stock allocation for Lee (in Q.3) makes zero sense no matter how you twist the meaning of human capital. So frustrating.
Max stated that his investment risk tolerance is “moderately high.”
Max asked Depuy: “Beyond simply getting older, how can Jan and I lower our need to purchase life insurance?”
Max also asked Depuy to explain the relationship between his job and term life insurance.
Tom mentioned that he would like to follow in his mother’s career path and eventually become a tenured finance professor.
Jan stated that “Max and I are concerned about outliving our assets and running out of income to fund our retirement needs.”
5. Taking into consideration Comments 1, 2 and 5 and Note 5, Depuy is most likely to recommend that Max and Jan increase their exposure to:
A. risky assets. B. risk-free assets. C. lifetime income instruments.”
(Institute 366)
Institute, CFA. Level III 2013 Volume 2 Behavioral Finance, Individual Investors, and Institutional Investors. John Wiley & Sons (P&T), 6/18/2012. vbk:9781937537340#page(366).
Answer given is B risk free assets. Why wouldn’t it be C which is an annuity and will allay concerns about outliving their retirement?
This whole reading is full of BS (or unintuitive to me). (As others have pointed out), 80% stock allocation for Lee (in Q.3) makes zero sense no matter how you twist the meaning of human capital. So frustrating.
)