Mudd was recently hired by Contis Capital Management as an education consultant for company defined contribution plans. Mudd’s role at the firm will be developing educational content and delivering that content to company employees to help them learn about their retirement plan. Jim Contis, the owner of the firm specializes in investment management, but makes the following statements to Mudd as she starts her new job:
Statement 1: Individuals in defined contribution retirement plans need to be educated about the concepts of risk and return, but once they understand investing, individuals tend to make investment decisions that are in their own best interests.
Statement 2: Once an individual investor in a defined contribution plan has attained a basic knowledge about investment concepts, they typically follow through on monitoring and making adjustments to their retirement plan.
With regard to Contis’ statements, Mudd should:
a) disagree with Statements 1 and 2.
b) agree with Statement 1, but disagree with Statement 2.
c) agree with both statements.作者: NakedPuts2011 时间: 2011-7-11 18:56
b -- they need to be coached to be more expert at risk management ( guessing!)作者: liangfeng 时间: 2011-7-11 18:56
A is correct. I chose :c in Jan.作者: Valores 时间: 2011-7-11 18:56
I picked B, can anyone explain why B is wrong?
NO EXCUSES作者: Analti_Calte 时间: 2011-7-11 18:56
Both statements are incorrect so "A" is correct.
In statement 1, this part is incorrect "but once they understand investing, individuals tend to make investment decisions that are in their own best interests. "
In statement 2, this part is incorrect "they typically follow through on monitoring and making adjustments to their retirement plan."作者: Darien 时间: 2011-7-11 18:56
I picked A.
Statement 1 is wrong because investors exhibit bounded self control which means that even though they know the correct thing to do they often cannot do it because of lack of self control.作者: zwjy 时间: 2011-7-11 18:56
Is this a Schweser question? It's more about semantic rather than context. Sometimes they try too hard to make it tough that it hardly makes sense作者: lcw77 时间: 2011-7-11 18:56
Yes. In plain language, the individuals can't live without the financial advisors.作者: Roflnadal 时间: 2011-7-11 18:56
Nice. I now want to be a financial advisor.作者: nannan66 时间: 2011-7-11 18:56
A - no doubt作者: Windjam 时间: 2011-7-11 18:56
Definitely A. Investors are loss averse, not risk averse.作者: Zestt 时间: 2011-7-11 18:56
Right answer is A because they need to consult a CFA Chartered Holder for advice and teach them all about behavor finance
