Exhibit 15 -Refer to Exhibit 15

question 19

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 recommended portfolio for Bob Bowman 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:

Poka-yoke

A mistake-proofing technique used in manufacturing and software development to prevent or correct errors by designing the manufacturing process, equipment, or software in a way that avoids errors or makes them immediately evident.

JIT Systems

Just-In-Time inventory management systems designed to increase efficiency and decrease waste by receiving goods only as they are needed in the production process.

Variability

The extent to which data points in a statistical distribution or set differ from each other and from their average.