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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.
-Refer to Exhibit 16.1. The expected utilities of Portfolios A, B and C for Bob Bowman are
Eccentricity
The quality of being unconventional or slightly strange in behavior or appearance.
Schizotypal
A personality disorder characterized by severe social anxiety, thought disorder, paranoid ideation, derealization, transient psychosis, and often unconventional beliefs.
Paranoid Personality
A mental health condition characterized by a pervasive distrust and suspicion of others' motives.
Genetic Link
The association between genetic factors and the likelihood of developing certain conditions or traits.
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