Develop an IPS for the following client with the relevant information requested below. Ashley ( 3 8
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Develop an IPS for the following client with the relevant information requested below.
Ashley and John Anderson live in West Fargo. Ashley stays home to care for their newborn twins. She recently inherited $after taxes in cash from her fathers estate. John earns an annual salary of $ before taxes. In addition, they have accumulated the following assets current market values:
$ in cash
$ in stocks and bonds
$ in common stock at work.
They need $ for a down payment on the purchase of a house and plan to make a $ nontaxdeductible donation to a local charity. Their annual living expenses are $ Aftertaxsalary increases will offset any future increases in their living expenses. Addition savings net of expenses will be invested.
They also want to achieve their educational goals for their children and their own retirement goals total of $ They want to have sufficient funds to retire in years, when their children beginning their four years of college education. They express that they do not want to experience a loss in portfolio value greater than percent in any one year. Their income is taxed at
a Formulate the risk objective.
b Formulate the return objective. Calculate the pretax rate of return that is required to achieve this objective. Show your calculations.
c Formulate the constraints portion.
i Time horizon
ii Liquidity requirements
iii. Tax concerns
iv Other circumstances
d Asset Allocation create a strategic asset allocation for the Andersons family. Explicitly provide asset allocation for the Andersons family. You can use the information provided below but you are free to develop your asset allocation. Justify your recommendation discussing portfolio characteristics and capital market assumptions.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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