NO.PZ202212280100005201
问题如下：
(1) The broker
suggests that Young rebalance her $5.5 million money market account and the
$3.0 million tax-deferred retirement account periodically in order to maintain
their targeted allocations. The broker proposes the same risk profile for the
equity positions with two potential target equity allocations and rebalancing
ranges for the two accounts as follows:
·
Alternative 1: 80% equities +/–
8.0% rebalancing range
·
Alternative 2: 75% equities +/–
10.7% rebalancing range
Determine
which alternative best
fits each account.
选项：
解释：
alternative 2 fits $5.5 million money market account. as this account is a money market account, we should consider the tax issue when detemine the alternative. Due to the wider rebalance range of alternative 2, it will make the tax more efficient and provide a higher return after-tax. so alternative 2 fits $5.5 million money market account.
alternative 1 fits $3.0 million tax-deferred retirement account.young will retire in 15 years and her living expense are fully covered by her job. it is more important to foucs on the growth of the account. the equity allocation of alternative is higher than the allocation of alternative 2. it mightl provide a higher return under the same risk. as this retirement account is a tax-deferred account, the alternative could have a narrower rebalancing range. so alternative 1 will fits $3.0 million tax-deferred retirement account.
