QUESTION 1 HAS TWO PARTS (A,B) FOR A TOTAL OF 10 MARKS Yoon Se-Ri is a private wealth advisor to high net worth Korean clients. She is reviewing a client's portfolio to determine whether she needs to make changes to the asset allocation policy. The client is a retired professor with a taxable investment portfolio of current market value KRW 10 billion. The pre-tax rate of return on the portfolio is 10.8%. Investment returns are taxed at 25%. Assume that cash holdings do not earn interest income. The client has stated the following retirement goals: Return Objective: Earn a minimum after-tax return of 8.5% per year. Liquidity Constraint: Have a cash reserve of at least KRW 400 million. The following table shows the asset mix and allocation of the client's portfolio: Asset Class Allocation in % of Portfolio Market Value Investment-grade bonds 30% Equities 60% Cash 10% A. Evaluate whether the portfolio meets the return objective and liquidity constraint. [6 MARKS] B. Suggest one change Yoon Se-Ri should make to the portfolio asset allocation. [4 MARKS]