Narration: Robert and Julia Peterson are a 65-year-old married couple contemplating retirement in… 1 answer below »

Robert and Julia Case Scenario
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Narration: Robert and Julia Peterson are a 65-year-old married couple contemplating
retirement in about two years. A major issue in their retirement planning is the asset
allocation for their retirement savings, which is currently at approximately two
million dollars. They don’t expect to save a material amount during the upcoming
year, instead investing in their home. They estimate that they will need to fund living
expenses for 25 years while retired. You are a financial advisor assisting them with
this decision.
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You provide them with three mutual funds for long-term investment of their funds.
NUequity, NUbond, and NUcash. Each of these funds is broadly diversified within its
asset class. One of the first things you need to determine is the Peterson’s tolerance
for risk. However, you are not getting a consistent answer from them. Julia prefers a
fairly conservative approach, which would keep downside risk to a moderate level.
Robert is seeking an aggressive portfolio that would allow them to maintain their
current lifestyle or significantly improve upon it.
Consider what allotment you’d like to propose to Robert and Julia. Use the risk and
expected return data below for each fund to inform your recommendation.

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