Suitability is one of the most common issues that arises in securities arbitrations. Yet it is also one of the most difficult issues to resolve. Up to now there has been no easy and reliable way to compare the risk of one stock or portfolio with another stock or portfolio measured as of the time...

The present work was intended originally as a chapter for my January 2006 Ph.D dissertation, but now is essentially a 'working paper.' As is well known, economists make a number of abstract and unrealistic assumptions, such as for example characterising the economic agent as a rational...