Long time horizon support, athlete, ability, his, long

ASSet_MANagemen

2006 exam

a retiring athlete @34

the answer states that he has long time horizon.

I am wondering: his earning ability is gone, and he has immediate cash needs to pay child support. in that sense, his time horizon is not long at all. Any one with me?

mar350

When discussing time horizon, do 2 things...

1. determine whether it is single stage or multi-stage, usually characterized by a change in the IPS (liquidity event, end of a cash inflow or out flow, end of employment, etc...)

2. Determine the length of time for each stage.

When it comes to evaluating the impact of time horizon on one's ability to take risk, you evaluate how long he will be investing. In the case of a 35 year old who is retiring, with $40 million, he will have a long time (40 + years) to invest indicating he can take more risk.

Zestt

You're solving for ERP, so just keep it in your head that a fully segmented market deserves a higher ERP.