A Family Will Retire in a Few Years

question 54

Multiple Choice

A family will retire in a few years. They have a high tax bracket and are concerned about their after-tax rate of return. A meeting with their financial planner reveals they are primarily focused on safety of principal and they will need a 6% to 8% average rate of return on their portfolio. They desire a diversified portfolio and liquidity is likely to be a concern due to health reasons. If you had to choose from the list below which of the following asset allocations seems to best fit this family's situation?

• A)10% money market; 50% intermediate term bonds; 40% blue chip shares, many with high dividend yields
• B)0% money market; 60% intermediate term bonds; 40% shares
• C)10% money market; 30% intermediate term bonds; 60% high dividend paying shares
• D)5% money market; 35% intermediate term bonds; 60% shares, most with low dividends

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Definitions:

Blind Taste Test

An evaluation method where the participants sample food or drink without knowing the brand or identity to prevent bias in their feedback.

Judged

Considered or deemed to be in a certain way, often after careful assessment.

Soundness

The attribute of an argument when it is both logically valid and its premises are true.

Cogency

The quality of an argument being convincing or persuasive due to the truth of its premises and its logical structure.