1. An investor’s risk tolerance is assessed in the following way

a. Willingness to take risk depends on how large the current income and the portfolio are relative to expenses

b. An investor who put almost all their portfolio into stocks, then subsequently lost 40% of it is likely to have less Willingness to take Risk in the future than may be appropriate

c. After assessing Willingness and Ability to take Risk, an investor should usually be advised to set the Risk Tolerance at the higher of the two.

2. Assume the stockholders of ABC stock are in the 25 percent tax bracket. The closing price of the stock today was $28.49 a share. The firm pays a quarterly dividend of $1.40 per share. What is the expected opening price of the stock tomorrow if tomorrow is an ex-dividend date?

$26.53

$27.09

$28.14

$27.61

$27.44