Questions 1 and 2 relate to Jack and Ruth Ingram . A total of 53 minutes is allocated to these questions . Candidates should answer these questions in the order presented . QUESTION I HAS YOU'R PARTS ( A, B, C D) FOR A TOTAL OF 3 3 MINUTES . Jack and Ruth Ingram , each 50 years old , live in Canada and have recently retired . Jack worked for much of his career at Pitt Manufacturing , a publicly traded , small - capitalization ( small - cap )* Canadian firm . Jack has agreed to join Pitt's board of directors without compensation . The* Ingrams are in good health and have adequate medical insurance coverage Jack has accumulated Pitt common stock currently valued at C$ 1 , 000, 000 through the company's employee stock ownership program . Since the Pitt stock has appreciated significantly in recent years , Jack's holdings have a low average cost basis . Pitt stock and options on the Pitt stock are traded in active and liquid markets on a national exchange . The Ingrams have recently inherited C $2 , 400 , 000 net of taxes consisting mostly of small - cap Canadian equities . The inheritance , the Pitt stock Jack has accumulated , and C $800 , 000 in bonds and cash equivalents represent their total financial assets . The Ingrams live in a house with a market value of C$ 1 . 250 , 000 . They have decided to donate the house to a their death . to a provincial park upon Their only child , Paul ( 2 2 years old ) , has a well -paying job and is economically independent . The Ingrams are meeting with Caleb Swann , CFA , their long - time advisor , to discuss financial planning issues . The Ingrams agree that their current annual pre- tax income need is C $ 200 , 000 . The Ingrams expect that their inflation- adjusted expenses will remain constant during retirement . They plan to fund their living expenses by taking annual distributions from their portfolio with the first distribution to occur immediately . Swann believes an appropriate long-term inflation rate is 2. 5 percent and an appropriate planning horizon is 35 years