Lifestyle costs 50% of gross income, married, 225,000$ gross income, 75 years old, net worth 150,000$, 4 children
Our client is currently 75 years old, married, and has four children. He is earning a gross income of $225,000 a year. Out of that $225,000 his lifestyle consumes $112,500 throughout the year. In addition, his current net worth is $150,000. Also, because he has four children he has a need for long term savings.
Questions:
A) Select one corporate, municipal or treasury bond and describe why you selected it. Describe the business, YtM or YTC, Duration, What impact rising rates would have on the value of the bond.
B) Identify how you could hedge your portfolio using options contracts.
C) Identify how you will evaluate performance.