Reading an IPS question and one of the answers says that the client’s return objective of 20% is unrealistic. How do I know what’s realistic or unrealistic? Like what’s a realistic range of returns? Who’s to say he can’t leverage up… The question doesn’t explicitly say he can’t borrow and go above the efficient frontier. He has the asset base to take on considerable risk. His yearly income exceeds his yearly expenditures by 250k to 150k and he has 15 years to retirement and a 2M asset base already, plus 2M inheritance coming in, AND he plans to sell his business to buy an annuity that will cover his retirement spending needs. Plus the question doesn’t give me any capital market expectations so I have no idea what we can expect in the next 30 years…
How come all these questions are so subjective? What’s the right answer? I hate this open ended BS. Might as well ask me if someone is rich poor ugly or attractive… Great I love failing exams cuz I have a different interpretation than the test producers. Wish they would ask questions that can be proven right/wrong.