2011 essay questions (Q5)

CFA Level III Portfolio Management
#1

The answer to question 5C (i) says that Finnegan should have a lower allocation to equities since she’s young and has a large amount of human capital relative to financial capital.

I was under the impression that, a young person with a higher/larger human capital should have a higher allocation to equities since human capital is more bond like.

An explanation would help please.

#2

If Finnegan is working in a volatile sector like investment banking to hedge against market risk, she would rather allocate higher portion of her savings into less volatile (stable) investments like Fixed income securities or would purchase an annuity. The rule what you said is a general rule of thumb, but specifics of personal risk exposures must be considered.