Be a Financial Planner-Discussion Case 1 This case is available in MyFinancelah John, age 28, and Emily, age 27, have just had their first child, Lindsey. They have a combined income of 555,000 and rent a two-bedroom apartment. For the past several years John and Emily have taken financial responsibilities one day at a time, but it has finally dawned on them that they now must start thinking about their financial future. Recently John has noticed the stock market begin to move higher, and he is convinced that they should be investing in stocks Emily is more interested in investing in collectibles such as sports memorabilia, because she's been reading reports of baseball trading card speculators making huge profits. When asked what their goals are John replies that he'd like to save for retirement, and Emily mentions her top priority as saving for Lindsey's college expenses. They both agreed that they'd like to buy a house and pay off $4,000 in credit card bills. When asked to list their investments, all they could come up with was a savings account worth $650 1. What should be John and Emily's first priority before investing or making any invest Questions plans? 2. If John and Emily asked you to prioritize their goals, how would you rank their invest objectives? Now match some investment alternatives to their objectives. 3. John and Emily are in the 15 percent tax bracket. Using a financial calculator and the investment category compound average returns given in Figure 5. determine the for nominal valor lassume inflation is zero) of their portfolio If they invested $2,000 per for 40 years in common stock What is the portfolio value If they invested in governme bonds? How about Treasury bills? 4. Should John and Emily invest all their money in one investment strategy (stada collectibles)? Explain your answer in terms of diversification and the asset allocation process 5. Given the information in Figures 5-9, explain why anyone would invest in gover mentor corporate bonds