Question: 1) RISK and CAPITAL ALLOCATION LINE. How is client risk quantified in a portfolio construction conversation? What are some of the practical issues that need

1) RISK and CAPITAL ALLOCATION LINE. How is client risk quantified in a portfolio construction conversation? What are some of the practical issues that need to be addressed to make the right decision for the client? Draw a picture of the goal of this risk discovery exercise with respect to portfolio construction (hint: think optimal complete portfolio).

2) ACTIVE VS. PASSIVE. Would you recommend an active or passive investment strategy to an 82-year old AU grad who is and the very end of her professional career? Substantiate your recommendation with either investor behavior or performance evidence from the mutual fund community.

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