Schweser practise exams vol 1. Exam 2. Q1 P.232.
The answer say the portfolio has significant liquidity needs - must provide $116,438 (net cash outflow p.a). So the guy ‘s ability to take risk is below average.
But the guy has net investable asset of $3675,000. $116,438 p.a liquidity needs means only 5.1% required return (after adding 2% inflation). I don’t understand why his ability to take risk is below average.
Can someone explains? |