€1,200,000 × (1 − 0.15) = €1,020,000. She also holds €75,000 in balanced mutual funds and €25,000 in a money market fund. Charmie intends to reevaluate her policy statement and asset allocation guidelines every three years.1Discuss Charmie’s liquidity requirements.1Determine Charmie’s return requirement and evaluate whether her portfolio can be expected to satisfy that requirement if inflation averages 3 percent annually and she reduces her annual living expenses to €100,000 by combining her apartment and studio. 1Explain why an analysis of Charmie’s investment policy statement might become necessary before the next three-year review. Hans’ increasingly irresponsible lifestyle has become a burden to his parents. Hans was recently arrested for reckless driving—he crashed his car into a restaurant, causing considerable damage and injuring a patron. As a result of Hans’ behavior, Pramod has placed him on probationary leave of absence from SahaMarine but will allow him to retain his annual salary of €100,000. The restaurant patron is suing Hans for €700,000 in damages, and the restaurant owner estimates that it will take €500,000 to repair damages to his building. Hans’ insurance will cover costs to a maximum of only €200,000.
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