Mary is the Chief Financial Officer for Beauty's Anonymous, a hypothetical private health care company that specializes in young adult beauty...

Mary is the Chief Financial Officer for Beauty's Anonymous, a hypothetical private health care company that specializes in young adult beauty products and over the counter drugs. Triple A rated Johnny Company (JL) is purchasing the company for $500mm. Mary, who has been with the company since inception, owns 10% of the company and will be receiving $50mm. The deal consists of $15mm in JL stock (zero cost basis), $5mm in JL 10 year bonds, (coupon of 3%, priced at par, 3% YTM) and $30mm cash. Mary has worked 24/7 and knows very little about managing portfolios and needs your advice. Mary is 62 years old, wants to retire and travel the world with her family. Before developing a plan she sends you the following information: Mary wants to establish a legacy foundation funded with $10mm, utilizing the JL bonds, to support causes dear to her heart. The foundation must pay out 5% of market value every year. Mary wants to set up a $5mm trust for her twenty year old daughter. The daughter will not be able to touch theprincipal for 20 years and will receive the money when she turns 40. Mary wants to devise a strategy for the remainder of the assets ($35mm) that generates a minimum $1mm return to support her annual income needs. Shebelieves the 10 year Treasury bond will be at a 5% yield to maturity in 3 years and believes inflation will accelerate to 4%/yr. She has a long-term time horizon and expects to live for another 30 years. She includedinformation (see Exhibit 1) with different asset classes with her view of their long-term rates of return and volatility profile. She wants to be very tax efficient