The following are facts relating to a potential client:

• Mdm Christina Chew is single, retired and 58 years old. She has no other family, no debts and owns her own home. She is in excellent health and has insurance cover in place to pay for hospitalization and surgical expenses.
• She has $2 million of savings from prior years held in the form of short-term instruments.
• The current annual inflation rate is 4%.
• Mdm Christina Chew is taxed at 35% on all income, including investment income and realized capital gains.

Mdm Christina Chew is patient, careful and conservative in all things. For her retirement portfolio which she has entrusted to you for management, she has stated that an annual after-tax real total return of 3% would be completely acceptable to her, if it were achieved in a context whereby an investment portfolio created from her accumulated savings was unlikely to decline by more than 10% in nominal terms in any given 12 month period.

Question: Assess Mdm Christinas return requirement and risk tolerance for her IPS. Justify your response.