Mike Martin and his wife Jennifer are both 50 years old, have no children, and live in Sydney, Australia. Mikes father, Liam martin, recently died and left his entire estate to Mike. Mike expects to receive his after-tax inheritance of 9 million Australian dollars (AUD) in one year. The Martins both plan to retire at that time, and are meeting with you to help them establish an investment plan. The Martins currently own a home valued at AUD 3.9 million, do not have a portfolio of investable assets, and do not consider their home as part of their investable assets. In one year, the Martins outstanding debt will be AUD 3.7 million (home mortgage) and AUD 160,000 (other debts). The Martins will pay off all of their debts once the inheritance is received. The Martins currently have a combined after-tax salary of AUD500,000, currently-year living expenses of AUD263,000, plus annual mortgage payments (both principal and interest) of AUD237,000. Mikes employer will pay him an after-tax pension of AUD 51,000 starting in one year when he retires. His employer will continue to pay all of the Martins medical costs until death. Both the pension and health benefits will continue to accrue to Jennifer, if Mike dies first. The Martins expect their living expense will continue to growth at the rate of inflation until one of them dies. At that time, they expect the survivors living expenses will decrease to 75% of their combined expenses and then continue to grow at the rate of inflation, which is expected to be 3% annually. The Martins intend to fund their living expenses during retirement with Mikes pension and the investment earnings generated from the assets invested in from the inheritance. The Martins consider their investment base to be large given the inheritance, want their portfolio to be invested conservatively, and want to maintain the real value of the investable assets over time. They plan to leave any assets left in their estate to charity. All income and realized capital gains are taxed at 25% in Australia. Their tax rate is at 20% bracket. Questions: (1) Calculate the required return for the Martins portfolio. Do not assume any tax effects related to the mortgage. You must show your calculations in order to get point. (2) Discuss the level of the Martins risk (including both their willingness and ability to take the risk, as well as the overall risk level). Justify each with at least two reasons