Reference no: EM133189126
Question - After interviewing a client in order to come up a written investment policy statement (IPS), you have established the following:
The client has annual earnings that vary dramatically between Sh. 3 million and Sh. 7 million (pre-tax) depending on performance.
In three of the previous five years, the after-tax income of the client has been less than Sh. 2 million annually.
The client's mother is dependent on her son (the client) for approximately Sh. 90,000 per year support.
The client's own subsistence needs are approximately Sh. 1,200,000 per year.
The client has more than 5 years' experience trading investments including commodity futures, stock options, and selling stock short.
The client's responses to a standard risk assessment questionnaire suggest he has above average risk tolerance.
Required - How would you characterise the client's ability and willingness to take risk? Discuss.
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