Case Problem 12.1: The Reverend Mark Thomas is the minister of a church in the San Diego...

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Finance

Case Problem 12.1:
The Reverend Mark Thomas is the minister of a church in the SanDiego area. He is married, has one young child, and earns a “modestincome.” Because religious organizations are not notorious fortheir generous retirement programs, the reverend has decided heshould do some investing on his own. He would like to set up aprogram that enables him to supplement the church’s retirementprogram and at the same time provide some funds for his child’scollege education (which is still some 12 years away). He is notout to break any investment records but wants some backup toprovide for the long-run needs of his family.
Although he has a modest income, Mark Thomas believes that withcareful planning, he can probably invest about $250 a quarter (and,with luck, increase this amount over time). He currently has about$15,000 in a savings account that he would be willing to use tobegin this program. In view of his investment objectives, he is notinterested in taking a lot of risk. Because his knowledge ofinvestments extends to savings accounts, Series EE savings bonds,and a little bit about mutual funds, he approaches you for someinvestment advice.
a. In light of Mark’s long-term investmentgoals, do you think mutual funds are an appropriate investmentvehicle for him?
b. Do you think he should use his $15,000savings to start a mutual fund investment program?
c. What type of mutual fund investment programwould you set up for the reverend? Include in your answer somediscussion of the types of funds you would consider, the investmentobjectives you would set, and any investment services (e.g.,withdrawal plans) you would seek. Would taxes be an importantconsideration in your investment advice? Explain.
PLEASE ANSWER THE QUESTION WITH A TEXT RESPONSE NOT WITHA PHOTO UPLOAD!

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3.8 Ratings (573 Votes)

a mutual fund is a diversify product that will lead to risk at minimum and mark is also not interested in taking a lot of risk so mutual fund is appropriate for him For long term mutual fund See Answer

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Transcribed Image Text

Case Problem 12.1:The Reverend Mark Thomas is the minister of a church in the SanDiego area. He is married, has one young child, and earns a “modestincome.” Because religious organizations are not notorious fortheir generous retirement programs, the reverend has decided heshould do some investing on his own. He would like to set up aprogram that enables him to supplement the church’s retirementprogram and at the same time provide some funds for his child’scollege education (which is still some 12 years away). He is notout to break any investment records but wants some backup toprovide for the long-run needs of his family.Although he has a modest income, Mark Thomas believes that withcareful planning, he can probably invest about $250 a quarter (and,with luck, increase this amount over time). He currently has about$15,000 in a savings account that he would be willing to use tobegin this program. In view of his investment objectives, he is notinterested in taking a lot of risk. Because his knowledge ofinvestments extends to savings accounts, Series EE savings bonds,and a little bit about mutual funds, he approaches you for someinvestment advice.a. In light of Mark’s long-term investmentgoals, do you think mutual funds are an appropriate investmentvehicle for him?b. Do you think he should use his $15,000savings to start a mutual fund investment program?c. What type of mutual fund investment programwould you set up for the reverend? Include in your answer somediscussion of the types of funds you would consider, the investmentobjectives you would set, and any investment services (e.g.,withdrawal plans) you would seek. Would taxes be an importantconsideration in your investment advice? Explain.PLEASE ANSWER THE QUESTION WITH A TEXT RESPONSE NOT WITHA PHOTO UPLOAD!