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As a finance professional, you are trying to establish a strategic asset allocation for your two clients Joe and Bill. Joe has a risk-tolerance factor

As a finance professional, you are trying to establish a strategic asset allocation for your two clients Joe and Bill. Joe has a risk-tolerance factor of 15, while Bill has risk-tolerance factor of 30. The features of the four portfolios to consider are as follows:

Portfolio Stock Bond Expected Return (ER) Risk (variance)

1 10% 90% 9% 10%

2 25 75 11 13

3 60 40 13 18

4 100 0 18 26

Which portfolio represents the strategic optimal asset allocation for Joe and Bill, respectively?

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