Jonah and Carly Marr are age 48 and 46, Jonah wants to retire at age 58. They are in the 25% marginal tax bracket. He has a deferred annuity with current FMV $60,000. They also have the following: Money market account $25,000 Money mkt mutual fund $55,000 XYZ stock. $35,000 ABC bond mutual fund. $65,000 Traditional IRS - J. $75,000 Traditional IRA - C. $60,000 Personal residence. $250,000 Interest and dividends. $10,500 Discretionary income $2,000/ month Risk tolerance - conservative Required rate of return - 12% Goal: Retire in 10 years Maximize after-tax return on investments Achieve a nominal annual return on future investments in excess of required return Proposed investments: Antiques. 10% Leveraged real estate. 9% Growth stock mutual fund. 12% S&P 500 index fund. 10% Taxable zero coupon bonds. 6% Muni bond fund. 4.5% Treasury bonds (LT). 5% International stock mutual fund. 11% Treasury notes - 10 year. 3.5% Treasury bills - 1 year. 1% Economy has been in a period of slow growth for the last year with inflation. CPI is 3% Unemployment last quarter 7.5% Real economic growth .75% Questions : 1. Regarding his goal to retire in 10 years which investment is most suitable? A. S&P 500 index, it will permit active investment management B. Growth stock mutual fund, fund has historically achieved greater annual return with managed risk C. Leveraged real estate, potential for max after-tax return is high with little threat to investment principal D. Treasury bills, they match his investment time horizon and will not incur purchasing power risk I selected D 2. What is their exposure? A. They are protected against the threat of increased inflation given their substantial cash position B. Their current portfolio as structured subjects them to a significant amount of market risk. C. Their total portfolio risk may be reduced through greater diversification into appropriate equity investments D. They are subject to an excessive amount of systematic risk that may be diversified away. I selected B 3. With their current portfolio which investment below would you recommend as an additional investment. A. Leveraged real estate B. International stock fund C. Muni bond fund D. Taxable zero coupon bond fund. I selected the international stock fund. Was that the correct