1. Items that must be monitored can be categorized in one of three ways. (683)

We can categorize most items that need to be monitored in one of three ways:
1. Investor circumstances, including wealth and constraints.
2. Market and economic changes.
3. The portfolio itself.

2. List and define three primary events which can affect the income, expenditures, risk exposures, and risk preferences for private wealth clients. (684)

For private wealth clients, events such as changes in employment, marital status, and the birth of children may affect income, expenditures, risk exposures, and risk preferences. Each such change may affect the client’s income, expected retirement income, and perhaps risk preferences. The responsibilities of marriage or children have repercussions for nearly all aspects of a client’s financial situation. Such events often mark occasions to review the client’s investment policy statement and overall financial plan. Identify the seven events that could cause a change in the liquidity requirements for a private wealth client.

3. Identify the seven events that could cause a change in the liquidity requirements for a private wealth client. (685)

Individual clients experience changes in liquidity requirements as a result of a variety of events, including unemployment, illness, court judgments, retirement, divorce, the death of a spouse, or the building or purchase of a home.

4. Monitoring a client's tax situation in order to achieve tax efficiency could include five actions an investment manager should consider. (687)

Monitoring a client’s tax situation may suggest the following actions, for example:
1. Deferring the realization of income from a higher-tax year to an anticipated lower-tax year.
2. Accelerating expenses to a high-tax year.
3. Realizing short-term losses at year-end to offset realized short-term gains in