PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
7th Edition
ISBN: 9780357033647
Author: Billingsley
Publisher: CENGAGE L
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Chapter 4, Problem 1FPE

Adapting to a low-interest-rate environment. A retired couple has expressed concern about the really low interest rates they’re earning on their savings. They’ve been approached by an adviser who says he has a “sure-fire” way to get them higher returns. What would you tell this retired couple about a low-interest-rate environment, and how would you recommend them to view the adviser’s new prospective investments?

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1. Which of the following investors is best suited to an investment objective that is mainly focused on generating capital gains? A well-paid young executive with excess income and preparing for retirement A retired couple whose pension income is insufficient to provide for their regular living expenses A young couple investing their savings for the eventual purchase of a home A salaried person who relies on investment income to meet the costs of raising and educating her children
At what point in one’s life is it safest to try a risky investment? Closer to or further from retirement? Explain your reasoning.
We have probably all heard about the Bernard Madoff Scandal. As investors we need to have adequate financial literacy to avoid these types of events. What steps can you take to help ensure your financial advisor is creating a portfolio that benefits you and your investment objectives? What types of questions should you be asking? What can you do to help ensure your returns are where they should be? (How would you check to verify that your returns are realistic and acceptable?)
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