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Which of the following statements regarding life expectancy and life span is correct?

A)	Life expectancy is known, but life span is unknown.

B)	Life expectancy is unknown, but life span is known.

C)	Life expectancy is unknown, and life span is unknown.

D)	Life expectancy is known, and life span is known.

Which of the following statements regarding life expectancy and life span is correct?

A)	One-third of all people in a given pool fail to reach their life expectancy.

B)	One-half of all people in a given pool reach their life expectancy.

C)	One-half of all people in a given pool reach their life span.

D)	One-third of all people in a given pool fail to reach their life span.

Which of the following statements regarding life expectancy and life span is correct?

A)	If a group of individuals base their retirement income precisely on life span, approximately one-half of them will outlive their assets.

B)	If a group of individuals base their retirement income precisely on life expectancy, approximately one-half of them will outlive their assets.

C)	If a group of individuals base their retirement income precisely on life expectancy, none of them will be expected to outlive their assets.

D)	If a group of individuals base their retirement income precisely on life span, most of them will be expected to outlive their assets.

What is typically used as a proxy for investment horizon, how do wealthy investors sometime differ from others as the investment horizon decreases, and how does the desirability of realizing capital gains change as the investment horizon decreases?

We typically use life span as a proxy for the investors life expectancy, which is ordinarily the most important factor in determining the investment time horizon. For most investors the level of risk tolerance decreases with investment horizon, but it may increase for some wealthy investors. In general, as the time horizon decreases, it becomes less desirable to realize capital gains.

We typically use life expectancy as a proxy for the investors life span, which is ordinarily the most important factor in determining the investment time horizon. For most investors the level of risk tolerance decreases with investment horizon, but it may increase for some wealthy investors. In general, as the time horizon decreases, it becomes less desirable to realize capital gains.

We typically use life span as a proxy for the investors life expectancy, which is ordinarily the most important factor in determining the investment time horizon. For most investors the level of risk tolerance increases with investment horizon, but it may decrease for some wealthy investors. In general, as the time horizon decreases, it becomes more desirable to realize capital gains.

We typically use life expectancy as a proxy for the investors life span (which is not known). The investors anticipated life span is ordinarily the most important factor in determining the investment time horizon. For most investors the level of risk tolerance decreases with investment horizon, but it may increase for some wealthy investors. This is because their assets are far in excess of what is needed for living expenses. Therefore, for assets earmarked for a bequest, the appropriate time horizon shifts from the investor to the recipient. When the recipient is an institution, the time horizon may effectively be infinite, and the risk tolerance for the assets may increase as the likely timing of the bequest draws closer. Because capital gains taxes can be deferred as long as the asset is held, this has important implications for investors planning to make a bequest. The desirability of realizing these gains decreases as the time horizon shortens. Moreover, the investor can gift the assets before death and avoid capital gains taxes, while also potentially realizing a tax benefit from the ability to take a deduction equal to the fair market value of the assets gifted.