Behavioral Finance T/F

deriv108 · May 23, 2011, 1:10am

1, If a group of individuals base their retirement income precisely on life span, approximately one-half of them will outlive their assets. True or False? 2, Tax avoidance is legal. True o False?

abushey31 · May 23, 2011, 1:13am

True 2) True Why did you title this Behavioral Finance though?

Paraguay · May 23, 2011, 1:20am

This is goals based investing/estate planning!

ananda2 · May 23, 2011, 1:23am

I would actually say false to the first.

Paraguay · May 23, 2011, 1:25am

first is false, it is life expectancy. Life span is not known ex-ante. ananda is correct. I can’t as hard as I try outlive my life span.

deriv108 · May 23, 2011, 1:25am

Sorry,… my bad.

bpdulog · May 23, 2011, 1:26am

False 2. True

sbmarti2 · May 23, 2011, 2:55am

The first is a BS question, if life span is not known ex-ante then spending cannot be based on it. That said, I definitely fell for it by picking true, as I interpreted life span as life expectancy. Questions like this scare the hell out of me- I would have said true, and felt 100% confident in it. Second is clearly true.

goodman2011 · May 23, 2011, 3:07am

TRUE TRUE

Malapass · May 23, 2011, 3:12am

I thought tax avoidance was illegal, tax efficiency or some other term they use was legal.

Paraguay · May 23, 2011, 3:13am

Evasion is illegal. Avoidance is expected.

Malapass · May 23, 2011, 3:18am

oh yeah. nice, thx.

forzajuve · May 23, 2011, 4:10am

False – it’s life EXPECTANCY, not lifespan. True – tax avoidance (e.g., transfer pricing) is legal. tax EVASION (e.g., not reporting income) is illegal.