Grace is a conservative middle-aged, single lady earning a decent income from her position as a Senior Manager in a sizeable property management company in Hong Kong. She is quite a risk-averse and her major investment (except her residential property which is already fully paid, with a current market value of $5,500,000) consists of $2,000,000 U.S. government bond, $500,000 international bond funds, and $1,000,000 local income stocks. However, she is going to retire in about 10 years and she is quite worried that her current investments may not give her any inflation protection and cover her retirement life. a. Taking her age and job into account, would you recommend any major changes to her investment portfolio? b. Discuss the major investment risks faced by Grace. c. If Grace insists on changing part of her investment portfolio to more risky investments in order to cover the inflation and her retirement life, what are your fair suggestions/ recommendations to her?

Grace is a conservative middle-aged, single lady earning a decent income from her position as a Senior Manager in a sizeable property management company in Hong Kong. She is quite a risk-averse and her major investment (except her residential property which is already fully paid, with a current market value of $5,500,000) consists of $2,000,000 U.S. government bond, $500,000 international bond funds, and $1,000,000 local income stocks. However, she is going to retire in about 10 years and she is quite worried that her current investments may not give her any inflation protection and cover her retirement life. a. Taking her age and job into account, would you recommend any major changes to her investment portfolio? b. Discuss the major investment risks faced by Grace. c. If Grace insists on changing part of her investment portfolio to more risky investments in order to cover the inflation and her retirement life, what are your fair suggestions/ recommendations to her?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter11: Investor Losses

Section: Chapter Questions

Problem 3RP

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