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Your 60 year old mother is in reasonable good health and has just received her retirement...

Your 60 year old mother is in reasonable good health and has just received her retirement funds of $140,000 from her employer of 40 years. As a financial management student, she trusts you to create an investment portfolio which will be suitable for her. Her tolerance for risk is low. Provide justification for your options

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Answer #1
  • In the given situation as the 60 year old mother received retirement funds of $140,000 and decided to invest them with least tolerance of risk.
  • As she is not willing to take risk more her expected return also will be low, as risk taken by her is low.
  • As a financial management student, I suggest her to invest in US Treasury Bonds, Treasury Bills and Treasury Notes.
  • They are AAA rated bonds, whose probability of default is almost nearer to zero. As they are backed by United States Government.
  • Usually the return from these bonds are low when compared to any other investments as they are less riskier compared to other investments.
  • This is the best investment plan i suggest to her as she is not willing to take any risk.
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