Q6. What is their tolerance for risk?

A)   Average.

B)   Below average.

C)   Above average.

Q7. What is Barbara’s willingness and ability to assume risk?  

Willingness                 Ability

A) Below average             Average

B) Above average            Above average

C) Above average            Average

答案和详解如下：

Q6. What is their tolerance for risk?

A)   Average.

B)   Below average.

C)   Above average.

Correct answer is A)

Their tolerance for risk is average. Their liquidity needs are high because of their living expenses and other needs yet they have a large portfolio so overall their risk tolerance is average. Since they are in their retirement years, they will need a greater proportion of dividend and interest income to be generated from their portfolio. This is balanced by their long time horizon which could exceed twenty years.

Q7. What is Barbara’s willingness and ability to assume risk?  

Willingness                 Ability

A) Below average             Average

B) Above average            Above average

C) Above average            Average

Correct answer is C)

Although Barbara’s willingness to assume risk may be high (above average) given her past entrepreneurial pursuits and the Analees’ time horizon is quite long, her ability to assume risk is average given her current income needs. Thus, the need to protect her current assets is important so her risk tolerance is lowered to average because of her high liquidity needs.

Thank you!