15 Client Profile

Bank insured CDs

1. First choice for preservation of capital 2.Not marketable (Unlike 100kjumbo traded in money market). You can cash it in early for your 10k back. 3.No interest rate risk

An investment adviser has a client who wants to save for college for her child. The child will be entering college in five years. This would be an example of A)an investment constraint B)a capital need C)tactical asset allocation D)planning too late

A) an investment constraint

Family balance Family Cash Flow Statement

Assets: -retirement palns -house -jewelry Liabilities: -loans Cash Flow: -Salary -Investment income -Expenses -Taxes NOT: -Term insurance

Among investor objectives is preservation of capital. Which of the following would be most appropriate for inclusion in the portfolio of this kind of investor? A)Blue chip stocks. B)International funds. C)U.S. Treasury bonds. D)A money market fund.

D)A money market fund. Preservation of capital means no fluctuations. Money market funds are the only logical choice here. True, the treasury bonds do not have default risk, but, because they can have maturities as long as 30 years, they are subject to interest rate risk.

objective and subjective c;leint profiling

Objective = quantifiable (salary, net worth) Subjective = non quant (attitude, tolerance)

Life insurance capital needs analysis

takes into consideration the future needs of the insured and family and then factors in how much needs to be filled in by life insurance.