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FIN 402 Week 2 Assignment Case Problem 5.2 Susan
Lussier’s Inherited Portfolio Does It Meet Her Needs
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Case Problem 5.2 Susan Lussier’s Inherited Portfolio: Does It Meet
Her Needs? Susan Lussier is 35 years old and employed as a tax
accountant for a major oil and gas exploration company. She earns
nearly $135,000 a year from her salary and from participation in the
company’s drilling activities. An expert on oil and gas taxation, she is
not worried about job security—she is content with her income and
finds it adequate to allow her to buy and do whatever she wishes. Her
current philosophy is to live each day to its fullest, not concerning
herself with retirement, which is too far in the future to require her
current attention. A month ago, Susan’s only surviving parent, her
father, was killed in a sailing accident. He had retired in La Jolla,
California, two years earlier and had spent most of his time sailing.
Prior to retirement, he managed a children’s clothing manufacturing
firm in South Carolina. Upon retirement he sold his stock in the firm
and invested the proceeds in a security portfolio that provided him
with supplemental retirement income of over $30,000 per year. In his
will, he left his entire estate to Susan. The estate was structured in
such a way that in addition to a few family heirlooms, Susan received
a security portfolio having a market value of nearly $350,000 and
about $10,000 in cash. Susan’s father’s portfolio contained 10
securities: 5 bonds, 2 common stocks, and 3 mutual funds. The
following table lists the securities and their key characteristics. The
common stocks were issued by large, mature, well-known firms that