Portfolio Management and Wealth Planning【Reading 14】
Which of the following statements regarding the Human Capital equation below is least accurate?
A)
| The expectancy of receiving a bonus is incorporated into the numerator. |
| B)
| The amount of human capital is based on an investor’s current annual inflows. |
| C)
| Volatility is included in the denominator. |
|
The Human Capital equation is:
Thus the amount of human capital (HCt) is based on future income expectations and not just current income. |