Selecting a Portfolio Use the two portfolios shown in the tables below to answer the questions in Part 3.
Portfolio 1
Asset Category Percentage of Portfolio
U. S. small-company stocks 5
U. S. large-company stocks 10
International stocks 5
U. S. government bonds 50
U. S. corporate bonds 30
Portfolio 2
Asset Category Percentage of Portfolio
U. S. small-company stocks 20
U. S. large-company stocks 30
International stocks 25
U. S. government bonds 15
U. S. corporate bonds 10
9. In your role as a financial advisor, you’re advising a client, Sally, a 30-year old computer programmer who makes an above-average salary. She’s investing money in her 401(k) that she doesn’t plan to use until retirement. In your opinion, which of the two portfolios above would be most appropriate for these funds? In your answer, explain why you believe the portfolio you’ve chosen is appropriate and explain why the portfolio you didn’t choose is not appropriate.
10. In your role as a financial advisor, you’re advising a client, Bob, who has just retired and rolled over his 401(k) into a self-directed IRA account. Bob intends to use these funds to provide income to live on in his retirement. In your opinion, which of the two portfolios above would be most appropriate for these funds? In your answer, explain why you believe the portfolio you’ve chosen is appropriate and explain why the portfolio you didn’t choose is not appropriate.