Behavioral Finance - Reading 10: Portfolios, Pyramids, Emot class, his, behavioral, represents, following

mayanfang1

Q1. Tommy Shaver is saving for his retirement. Shaver invests as behavioral finance would predict. According to behavioral finance, which of the following best represents how Shaver will fund this objective?

A)   Shaver will use a pyramid approach and fund it with safe investments at the top of the pyramid.

B)   Shaver will use a modern portfolio approach and diversify across global stocks, bonds, and alternative assets.

C)   Shaver will use a pyramid approach and fund it with safe investments at the bottom of the pyramid.

Q2. Some proponents of behavioral finance believe that investors structure their portfolios as pyramids. Which of the following best represents the resulting structure of their portfolios?

A)   The bottom layer of an investor’s pyramid will be invested in stock with higher layers invested in bonds and cash.

B)   Several pyramids of different sizes will be formed, each representing a different funding requirement.

C)   The bottom layer of an investor’s pyramid will be invested in bonds and cash with higher layers invested in stock.

deqiang

thanks.

rawrdinosaur

ty

rawrdinosaur

ty

Figo-wong

DC plan investors tend to think about retirement itself (spending days on the beach) but do not think at all about dollar amounts and return requirements. This is a significant factor that limits the ability of defined contribution plan investors to successfully manage their investments.

suodi

[em50]

maxsimax

tq

saintrich

 thanks

space5

thnaks

saint_zhu

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