Behavioral Finance T/F

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?

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

This is goals based investing/estate planning!

I would actually say false to the first.

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.

Sorry,… my bad.

  1. False 2. True

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.


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

Evasion is illegal. Avoidance is expected.

oh yeah. nice, thx.

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.