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Topic 10: Client Attitudes and Behavioral Characteristics - 21 B Risk tolerance is affected by an individual s family situation (eg, marital status and the number and ages of children) 3 Emotional A There is a cost to letting emotions drive investment decisions B Most people invest emotionally instead of objectively C When emotions run high, investors are easily swayed by noise from the media D Investors have an aversion to losses, mixed with a tendency to hang onto losing stocks They often do not acknowledge making a mistake, resulting in their selling winners instead of losers E Investors wrestle with sell decisions based on how much they have invested but the amount invested should not matter The price paid is a sunk cost and should have no in uence on the decision to buy more, sell, or hold F Proper diversi cation is an alternative to emotional investing 4 Life cycle and age A There are four life cycle phases: (1) Accumulation phase (a) Early to middle years (approximately before 40 years old) (b) Protecting the family from a potential nancial disaster resulting from death or disability (c) Building cash reserves and emergency funds to meet unexpected situations and saving for home, car, retirement, and children s education (d) Individuals are accepting of high-risk investments for above-average returns (2) Consolidation phase (a) Past midpoint of their careers (approximately 40 to 60 years old) (b) Paid off most or all outstanding loans and have children s education funded, but continue saving for retirement (c) Individuals are accepting of moderate-risk investments (3) Spending phase (a) Begins when an individual retires (b) Individuals seek greater capital preservation (c) Individuals are accepting of low-risk investments, but they still need to have some risky investments for in ation protection (4) Gifting phase (a) Similar to and may mirror the spending phase (b) Estate planning is critical in this phase 5 Level of knowledge, experience, and expertise A Risk tolerance often rises with an increase in knowledge and experience, but declines as a client approaches retirement B Planners should identify their clients knowledge level before investing in instruments their clients do not understand 6 Risk tolerance A In certain cases, measuring risk tolerance can be objective, but generally it is a subjective measure of the emotional and nancial ability of an investor to withstand nancial loss.

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(processing directives, etc) The result of compilation is a new servlet one that the developer doesn't edit directly which combines the presentation logic of the JSP file and the references to other Java objects (such as HitsBean, shown earlier) This is the servlet that's actually executed at runtime The entire process is shown in Figure 7-8 Figure 7-8 JSP life-cycle flowchart

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There's good news and bad news about the execution flow shown in Figure 7-8 The good news is that servlet compilation is automatic If a JSP page is changed, the next request to it will trigger recompilation Of course, the bad news is that some errors made to the page can be identified only at runtime! More bad news is that the first request to a JSP needing recompilation obviously will trigger recompilation, making this request (along with ones concurrent to it) slower However, when you're dealing with a Web site that has thousands of clients, this may not be that big a deal You might wonder what this generated servlet code actually looks like It's not pretty (in terms of code spacing and comments); in fact, its content can be downright cryptic However, it's useful to look at a snippet of it here so that you can be convinced that nothing out of the ordinary is happening Listing 7-7 is some of the generated code for the JSP example we've been using throughout this chapter It was generated by Apache Jakarta/Tomcat 321 Listing 7-7 Example of Generated Servlet Code

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22 - General Principles of Financial Planning B A careful analysis of the client s risk tolerance should precede any discussion of return objectives C In a simplistic sense, investors are classi ed as high, moderate, and low risk takers

net worth of the company This expense reduces the income for each of the 10 years the company anticipates using the equipment The expense approximately matches the decline in value of the machinery As seen earlier, however, the MACHINERY account is not altered Instead, an accumulation account is created Note that the $1,000 is a credit to this accumulation account instead of a credit to the MACHINERY account At year-end, the MACHINERY account will still carry the machinery at cost ($10,000 as a debit) but will also contain a credit for $1,000 The ACCUMULATED DEPRECIATION account is a subtotal of the wear and tear on the machinery The ACCUMULATED DEPRECIATION account is an example of a contra account In this case, the account is an asset account, except that it acts as a way to reduce or cancel out other assets.

1 public class _0002fjsp__0002fhits_0002fhits_0002ejsphits_jsp_3 2 extends HttpJspBase { 3 4 // begin [file="C:\\jsp\\hits\\hitsjsp";from=(2,0);to=(2,62)] 5 // end 6 7 static { 8 } 9 public _0002fjsp_0002fhits_0002fhits_0002ejsphits_jsp_3( ) { 10 } 11 12 private static boolean _jspx_inited = false; 13 14 public final void _jspx_init() throws JasperException { 15 } 16

At the end of the year, the accounting records will still carry MACHINERY at $10,000 as a debit and also carry ACCUMULATED DEPRECIATION as a credit of $1,000 The balance sheet will probably net the two values and include the difference on the statement Therefore, the balance sheet, which sums the value of assets and liabilities, will not be signi cantly impacted by the preceding accounting treatment However, this method provides additional information that may be of use to some analysts Accountants use several methods to allocate the decline in value to different years The simplest method is called the straight-line method, which allocates an equal amount of expense to each year To calculate the annual expense, the accountant needs to determine the useful life of the asset and the value at the end of that useful life.

17 public void _jspService(HttpServletRequest request, 18 HttpServletResponse response) 19 throws IOException, ServletException { 20 21 JspFactory _jspxFactory = null; 22 PageContext pageContext = null; 23 HttpSession session = null; 24 ServletContext application = null; 25 ServletConfig config = null; 26 JspWriter out = null; 27 Object page = this; 28 String _value = null; 29 try { 30 31 if (_jspx_inited == false) { 32 _jspx_init(); 33 _jspx_inited = true; 34 } 35 _jspxFactory = JspFactorygetDefaultFactory(); 36 responsesetContentType("text/html;charset=8859_1"); 37 pageContext = _jspxFactorygetPageContext(this, request, 38 response, "", true, 8192, true); 39 40 application = pageContextgetServletContext(); 41 config = pageContextgetServletConfig(); 42 session = pageContextgetSession(); 43 out = pageContextgetOut(); 44 45 // HTML 46 // begin [file="C:\\jsp\\hits\\hitsjsp;from=(0,36);to=(2,0)] 47 outwrite("\r\n\r\n"); 48 // end 49 // begin [file="C:\\jsp\\hits\\hitsjsp";from=(2,0);to=(2,62)] 50 51 52 // begin [file="C:\\jsp\\hits\\hitsjsp";from=(8,2);to=(8,32)] 53 if (hitsincrHits() == 10) { 54 // end 55 // HTML 56 // begin [file="C:\\jsp\\hits\\hitsjsp";from=(8,34);to=(12,0)] 57 outwrite("\r\n\r\n<B>Congratulations, you are the "+ 58 "10th person today!</B>\r\n\r\n");

// end // begin [file="C:\\jsp\\hits\\hitsjsp" // ;from=(12,2);to=(12,13)] } else { // end // HTML // begin [file="C:\\jsp\\hits\\hitsjsp"; // from=(12,15);to=(16,0)] outwrite("\r\n\r\nWelcome! You are #\r\n\r\n"); // end // begin

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