1. What is a potential concern regarding the royalty income from a retiring musician that may need to be addressed?
2. What investment class (equity, fixed income, real estate etc.) do the royalty payments mimic? Why?
3. Mr. W informs you that at retirement he plans to move from California, a state with high income taxes to Texas, a state with no income tax. How does this impact his objectives and constraints?
4. Mr. W. informs you that he has a 30 year old special needs child that will need special care after his death. He has contingency plans for caregivers and figures this will require an expense of around $100,000 per year. How does this impact the time horizon of the portfolio and its risk/return requirements? What about sensitivity to inflation?