Risk Tolerance Questionnaire Global Portfolio Allocation Scoring System (PASS) for Individual Investors

QuestionsS/AAgreeNeutralDisagreeS/DScore1. Earning a high long-term total return that will allow my capital to grow faster than the inflation rate is one of my most important investment objectives. 2. I would like an investment that provides me with an opportunity to defer taxation of capital gains to future years. 3. I do not require a high level of current income from my investments. 4. I am willing to tolerate some sharp down swings in the return on my investments in order to seek a potentially higher return than would normally be expected from more stable investments. 5. I am willing to risk a short-term loss in return for a potentially higher long-run rate of return. 6. I am financially able to accept a low level of liquidity in my investment portfolio.

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Current PortfolioCurrent PercentagePass Recommended Portfolio Long-termCash and Money Market Fund$ % %Treasury Bonds/Bond Funds$ % %Corporate Bonds/Bond Funds$ % %International Bond Funds$ % %Index Fund$ % %Large/Mid/Small Stocks$ % %International Stocks$ % %Real Estate Funds$ % %Totals$100,000 100% 100%

Assignment: Fill in the PASS boxes of where Tommy and Kristine Kraft indicated their risk tolerance. Add up their score.

Then, list their current investments under Current Portfolio and put the percentage in the Current Percentage column. Then, list the long-term recommended portfolio percentages for their score and talk about where the differences are. (You can use your book, since this is just practicing what you have been shown and typing it for yourself.) How could this affect their long-term financial outlook? (200 words min for the discussion part).