Math/Physic/Economic/Statistic Problems
Calculate the expected return of the equity index tracker fund and explain what is meant by tracking error to Mrs Yorkie.
(8 marks)
Calculate the yield to maturity of each of the gilts and explain what is meant by cash matching to Mrs Yorkie.
(32 marks)
Calculate the required return of the portfolio within Mrs Yorkie’s SIPP for her to retire at 55, 60 or 65 years old.
(24 marks)
Calculate the percentage weights of the equity index tracker fund and one of the gilts in the three portfolios for Mrs Yorkie to retire at 55, 60 or 65 years old. You should state clearly which gilt will be included in each portfolio.
(12 marks)
Advise Mrs Yorkie of the earliest age that she may retire at if she has a low or a medium risk tolerance and provide at least five relevant caveats (disclaimers) to your advice.
(24 marks)