Deterministic models

NO.PZ202109080500000304 问题如下 Moselle Wealth Aisers Case Scenarioniel anMarie Benetton have cithnow is the time to hire a wealth manager to help them better manage their investments they prepare for retirement. They have gatherethe following information concerning their personfinancisituation:Both niel anMarie are 55 years ol niel is a senior IT projemanager, anMarie is a nurse practitioner. Their combineannusalary income is $260,000, anfuture annupraises are expecteto keep pawith inflation. They save 20% of their gross salary income per year. They have two chilen, ages 16 an14, who eaexpeto attenuniversity for four years when they turn age 18. Their resinis value$520,000, with no outstanng mortgage. In the next 10 years, Marie expects to receive inheritanfrom her mother’s estate anticipateto worth about $1.1 million. They currently have $2.3 million in investment anretirement portfolios, whithey self-manage.When the Benettons searchefor a wealth management firm, their objective wto selea firm whose wealth managers hthe following attributes:Capitmarket proficiency, inclung sector ansecurity expertiseFinanciplanning knowlee, inclung proficienin insuranantaxation Portfolio construction ability, inclung taileknowlee of asset class risk, return, ancorrelation After consiring severwealth management firms, the Benettons hire anschele a meeting with Peter Raphael, a private wealth manager with Moselle Wealth Aisers. Moselle specializes in serving high-net-worth invials anfamilies.The meeting begins with a scussion of financigoals. The Benettons state thin the intermeate-term they plto funtheir chilen’s university ecation, whithey expewill cost $350,000; woullike to purchase a vacation home for no more th$425,000; anhope to retire age 65 with inflation-austeannuincome of $160,000. Their long-term goals are to make a $250,000 gift to a health care charity ana $200,000 gift to Marie’s alma mater anleave inheritanof least $3 million in totto their chilen. When Raphael asks about the retirement income goanhow the amount wtermine the Benettons responththey hope to able to maintain their current stanrof living in retirement anstress the importanof having confinththey will achieve their income gofor the rest of their lives.When the conversation moves to a scussion of investment risk, the Benettons state ththey are morately conservative anhave investea large portion of their assets in securities thhave below-average volatility. Raphael respon with the following comment: “your wealth manager, I chelp you better unrstananshape your perception of investment risk, whiwoulthen enable you to increase your risk tolerance.” Raphael explains ththe next step is to perform a capitnee analysis to termine whether the Benettons are likely to accumulate sufficient financiresources to meet their objectives. Raphael makes the following comments comparing the two metho for evaluating capitsufficiency—the Monte Carlo anterministic mols. Both mols are baseon forwarlooking capitmarket projections, with the Monte Carlo mol assuming a compounreturn anthe terministic mol assuming lineportfolio growth.aantage of the Monte Carlo mol is thit ccustomizeto inclu input ta for suvariables inflation expectations anmanagement fees. Unfortunately, neither mol is able to take into account the impaof taxes on investment returns. When the Benettons express interest in learning more about the Monte Carlo mol, Raphael provis the example presentein Exhibit 1. He explains ththe mol results are baseon a hypotheticclient with a conservative risk profile who hestablishemultiple goals over a 20-yetime horizon. The client hset confinlevels for meeting the goals 95%, 85%, an75% 10, 15, an20 years, respectively.Exhibit 1: Monte Carlo Simulation Results—ExampleQuestion Whiof Raphael’s comments comparing the Monte Carlo anterministic mols is most accurate? The comment regarng: A.customizeinput t B.capitmarket projections. C.the incorporation of teffects. SolutionA is correct. Monte Carlo mols cincorporate customizeinput tsulife expectancy, taxes, inflation, aninvestment management fees.B is incorrect. The Monte Carlo mol assumes a simple average return ana stanrviation of returns for the portfolio, wherethe terministic mol assumes lineportfolio growth. Both mols shouluse forwarlooking capitmarket assumptions.C is incorrect. The Monte Carlo mol cinclu tassumptions, but the terministic mol es not have thcapability. 请辨析A和B