SECTION B The questions in section B add up to 50 marks in total. QUESTION ONE [a) Explain 2 factors that can affect the price of a bond. (b) What is the standard deviation used to represent the expected returns of investments? Should investors always avoid investments with a high standard deviation of expected returns? Why or why not? (c) Explain why correlation of returns is important to consider when building an investment portfolio. (4+ 4+ 4 = 12 marks) QUESTION TWO Pedro and Wanda Smith are both aged 68. They have retired and want to learn more about their entitlement to the age pension from you. They have provided the following information to you about determining their eligibility for the age pension. Value Income Financial Assets $145,000 $9 500 Car $18,000 House contents $30,000 House (principal residence] $500,000 Holiday rental apartment $250,000 18,000 (rental income) REQUIRED: (a) Calculate and assess the couple's eligibility for the age pension under the Assets Test. (b) Calculate and assess the couple's eligibility for the age pension under the Incomes Test. (c) Under which test would the couple receive a Centrelink Age Pension? (d) Provide strategies you can suggest that may assist the couple in maximizing their age pension entitlement. (4+ 4 + 2+ 3 = 13 marks) QUESTION THREE Peter is 58 years old and has $500,000 in a superannuateon account. This includes a tax-free component of $200,000 and a taxable superannuaten component of $300,000. Peter takes his $500 000 to an income-stream provider and the provider agrees to pay him $30,000 p.a. for the next 25 years. He has other income of $18,900. (a) Calculate his taxable income and the total tax payable that he could expect to pay for the year ended 2021/2022. Assume the current tax rates apply and include the pension rebate. (6 + 4 = 10 marks) Section B continued on the next page(Section B continued) QUESTION FOUR (a) What is the importance of testamentary capacity in the process of making a will? (b) Explain what a general power of attorney is. Outline two situations in which a general power of attorney will be cancelled. (c) What effect do divorce, remarriage and separation have on a will? (6+ 6 + 3 = 15 marks) [12 + 13 + 10 + 15 = 50 Marks]