Exhibit 15 -Refer to Exhibit 15

question 40

Multiple Choice

Exhibit 15.1
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.
                               $\begin{array}{c}\begin{array}{lll}\text{Asset Mix}\end{array}\begin{array}{lll}&&&\end{array}\begin{array}{lll}Expecterd\end{array}\end{array}$
$\begin{array}{cllcc}\text { Portfolio } & \text { Stock } & \text { Aond } & \begin{array}{c} \\\text { Return }\end{array} & \text { Variance } \\\hline \text { A } & 0.75 & 0.25 & 0.12 & 0.45 \\\text { B } & 0.4 & 0.6 & 0.08 & 0.16 \\\text { C } & 0 . & 0.7 & 0.05 & 0.66\end{array}$
-Refer to Exhibit 15.1.The expected utilities of Portfolios A,B and C for Tom Luck are

• A) Portfolio A = 9.95, Portfolio B = 7.27, Portfolio C = 4.73
• B) Portfolio A = 4.5, Portfolio B = 5.33, Portfolio C = 4.0
• C) Portfolio A = 7.95, Portfolio B = 5.33, Portfolio C = 4.73
• D) Portfolio A = 3.5, Portfolio B = 7.27, Portfolio C = 4.73
• E) Portfolio A = 5.33, Portfolio B = 7.27, Portfolio C = 6.75

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Definitions:

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