1. After interviewing a client in order to prepare a written investment policy statement (IPS), you have established the following:

• The client has earnings that vary dramatically between 30,000 and 70,000 (pre-tax) depending on weather patterns in Britain.

• In three of the previous five years, the after-tax income of the client has been less than 20,000.

• The clients mother is dependent on her son (the client) for approximately 9,000 per year support.

• The clients own subsistence needs are approximately 12,000 per year.

• The client has more than 10years experience trading investments including commodity futures, stock options, and selling stock short.

The clients responses to a standard risk assessment questionnaire suggest he has above-average risk tolerance.

Describe the client's risk tolerance in terms of willingness and ability.

Discuss the difference between Ability to Bear Risks and the Willingness to Bear Risks.