Allenden

Which asset best repress the human capital: equity,  AAA CORPORTAT BOND, GOVERNMENT BOND, AMORTIZED  ...
dpictureq 发表于 2012-6-8 16:00

I chose Treasury bill. It may sound ridiculous but my reason is that now his salary is indexed to inflation.So it is like you invest in Treasury bill every year with interest rate determined by the prevailing market interest rate and get the cash inflow at the end of every year. And because the interest rate of Treasury is highly correlated with short-term inflation rate, so I think Treasury bill best represents his human capital. But I don't have faith in my answer even when I wrote this but I can't think of the reasons to choose other assets at that time and I was running out of time....

Allenden

In North America, People most likely chose Big Cap Equity. I asked few exam taker.
Reasons: inflat ...
gcaxu 发表于 2012-6-13 05:33

I also think ABS is not likely because its CF uncertainty and most importantly, maturity date uncertainty.
Which means you don't know exactly how much you will get and when you will not be paid.But it is not the case in the question. The length of salary contract is 10 year for sure. and I believe the amount of salary become certain when you know the inflation number. But I do think the amortization feature resembles its human capital because you get periodic cash flow.

Overall I think Treasury, ABS, Big Cap Equity in some aspects resemble its human capital but in other ways they don't mimic its human capital at all. In the end CFA's words count !

Allenden

回复  Allenden


    so which one did you choose? I still prefer Treasury.First ABS is not suitable ...
cfasift 发表于 2012-6-13 10:20

I chose Treasury too.