Reading 19 Quiz

Which of the following is false? A) Life insurance is the perfect hedge for human capital in the event of death B) Investors need to make asset allocation decisions and life insurance decisions independently C) When human capital becomes volatile or risky, you should reduce overall risk in the financial portfolio


I think C. Life insurance pays off when death occurs. So A) is true. And asset allocation and Life insurance decisions need to be made independently – True. C --> is false. When HC is volatile/Risky - more risk in FC should be taken… ???

No. Asset allocation and life insurance decisions need to be made togheter. Often investor do the opposite and it’s wrong (according to CFAI). If human capital represents a large portion of one’s life, how can you exclude that from asset allocation? It’s def B

B. Life insurance is like a put option on human capital.

b, linked through HC


def B, cp recall when ur hcapital is risky ur porfolio should be more bond like

b is the correct answer!!


AMA and CP i think u misread its asking which is FALSE! C is def true


B, because A and C are definitely right.

pimpineasy Wrote: ------------------------------------------------------- > AMA and CP i think u misread its asking which is > FALSE! C is def true OMG, I made this mistake often ! My answer : B

yes double negative are a cfai fave i can only imagine non native english speakers difficulty with this

I am going to write the essay section in an obscure Mongolian script, or may be hieroglyphs from the Mayan; make it a tad difficult for them to grade too.