INDIMDUAL INVESTOR - Investment Policy Statement Robert recently died and left his estate to his only child. Michael Musyoka. Michael and his wife, Martha are both 40 years old and have no children (Assume today is 1s January). Michael expects to receive his inheritance of . Sh 15.0 million this year from his dad's estate. The Musyokas are meeting with Emily Otieno to help thern establish an investment plan. The Musyokss cumently have no investment portfolio and they own a home walued at Kish 4.7 million. At the end of this year, the Musyokas outstanding debt will be Ksh 3.5 million (home mortgage), and their credit card debt of K sh. 250.000. The Musyokas will pay the mortgage balance and credit card debt soon after the inheritance is received. The Musyokas currently have a combined pre-tax monthly salary of Ksh. 875,000 , monthly living expenses of Ksh. 250,000. plus annual mortgage payments (principal + interest) of Ksh. 525,000. Michael's employer has a pension for its employee, unlike Martha's. His employer will continue to pay all of the Musyokas' medical costs until death. Both the pension and health benefits will continue to accrue to Martha if he dies first. The Musyokas expect their living expenses will also continue to grow at the inflation rate. Any surplus cash flow will go towards invested portfolio while deficits may be withdrawn from the same portfolio. The Musyokas' desire is to create a foundation that will cater to the less-fortunate families in their constituency. They will create a legal foundation upon retiring at age 60 and transfer their wealth to this foundation. They will serve as directors of the foundation and will draw salaries to complement pension income to meet their living expenses. To accumulate sufficient wealth prior to retirement, their portfolio should grow at a rate of 6% above the inflation rate. Inheritance is not subject to tax but sil other incomes are subjected to 20% income tax. inflation in the current year is 4.5%. REQUIRED 8. Formulate the primary return objective of Musyokas 3 marks b. Compute their portfolio position at the end of their 40th year 6 marks c. Explain indicators why the Musyokas' ability to assume risk in their investment portfolio is below average. 6 marks d. Identify and justify two key personality traits of Musyokas and how these traits influence their portfolio 8 marks e. Describe any cnstraints to Musyokas portfolio management 3 marks 26 marks INDIMDUAL INVESTOR - Investment Policy Statement Robert recently died and left his estate to his only child. Michael Musyoka. Michael and his wife, Martha are both 40 years old and have no children (Assume today is 1s January). Michael expects to receive his inheritance of . Sh 15.0 million this year from his dad's estate. The Musyokas are meeting with Emily Otieno to help thern establish an investment plan. The Musyokss cumently have no investment portfolio and they own a home walued at Kish 4.7 million. At the end of this year, the Musyokas outstanding debt will be Ksh 3.5 million (home mortgage), and their credit card debt of K sh. 250.000. The Musyokas will pay the mortgage balance and credit card debt soon after the inheritance is received. The Musyokas currently have a combined pre-tax monthly salary of Ksh. 875,000 , monthly living expenses of Ksh. 250,000. plus annual mortgage payments (principal + interest) of Ksh. 525,000. Michael's employer has a pension for its employee, unlike Martha's. His employer will continue to pay all of the Musyokas' medical costs until death. Both the pension and health benefits will continue to accrue to Martha if he dies first. The Musyokas expect their living expenses will also continue to grow at the inflation rate. Any surplus cash flow will go towards invested portfolio while deficits may be withdrawn from the same portfolio. The Musyokas' desire is to create a foundation that will cater to the less-fortunate families in their constituency. They will create a legal foundation upon retiring at age 60 and transfer their wealth to this foundation. They will serve as directors of the foundation and will draw salaries to complement pension income to meet their living expenses. To accumulate sufficient wealth prior to retirement, their portfolio should grow at a rate of 6% above the inflation rate. Inheritance is not subject to tax but sil other incomes are subjected to 20% income tax. inflation in the current year is 4.5%. REQUIRED 8. Formulate the primary return objective of Musyokas 3 marks b. Compute their portfolio position at the end of their 40th year 6 marks c. Explain indicators why the Musyokas' ability to assume risk in their investment portfolio is below average. 6 marks d. Identify and justify two key personality traits of Musyokas and how these traits influence their portfolio 8 marks e. Describe any cnstraints to Musyokas portfolio management 3 marks 26 marks