Exhibit 16 -Refer to Exhibit 16

question 22

Multiple Choice

Exhibit 16.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
A portfolio manager is trying to establish a strategic asset allocation for two different clients, Bob Bowman and Tom Luck. Bob Bowman has a risk tolerance factor of 22 and Tom Luck has a risk tolerance factor of 6. The characteristics of the three model portfolios under consideration are provided in the table below. $\begin{array}{ccccc}&\text { Asset Mix}&&\text { Expected}\\\text { Portfolio } & \text { Stock } & \text { Bond } & \text { Return } & \text { Variance } \\\hline \text { A } & 0.75 & 0.25 & 0.12 & 0.45 \\\text { B } & 0.4 & 0.6 & 0.08 & 0.16 \\\text { C } & 0.3 & 0.7 & 0.05 & 0.06\end{array}$
-Refer to Exhibit 16.1. The recommended portfolio for Tom Luck is

• A)Portfolio A because it has expected utility of 9.95
• B)Portfolio A because it has expected utility of 4.5
• C)Portfolio B because it has expected utility of 5.33
• D)Portfolio B because it has expected utility of 7.27
• E)Portfolio C because it has expected utility of 6.75

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Definitions:

Entry-Level

A job or position that is designed for or accessible to people who are new to a field, profession, or activity and typically requires minimal prior experience or skills.

Portfolio Case

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Teaching Philosophy

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Graphic Designing

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