IsThereAny
New member
- Jun 18, 2026
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Doing EOC questions from CFAI books and ran into some pretty ambiguous solutions when it comes to asset allocation. In particular, the questions when you are asked to pick a strategy based on the individual’s human capital and other circumstances. For instance, one question states:
“Mr. Smith is a 35 year old equity trader with an average annual income of $200,000. His income exhibits a 0.9 correlation to the performance of the S&P 500. Recommend a strategy and justify.”
The answer is 80/20 stocks/bonds. (seemed aggressive based on information given about the correlation)
Then, another question stated an individual was 23 and worked as a stock broker and to pick a strategy. The answer didn’t give specifics about allocation, but said “investors with equity-like human capital should be invested predominantly in fixed-income assets.”
These 2 answers seem contradictory to me.
Those that have passed or seem to be able to pick the correct strategy consistently, did you have a set of boundaries/rules or did you just go with your gut?
“Mr. Smith is a 35 year old equity trader with an average annual income of $200,000. His income exhibits a 0.9 correlation to the performance of the S&P 500. Recommend a strategy and justify.”
The answer is 80/20 stocks/bonds. (seemed aggressive based on information given about the correlation)
Then, another question stated an individual was 23 and worked as a stock broker and to pick a strategy. The answer didn’t give specifics about allocation, but said “investors with equity-like human capital should be invested predominantly in fixed-income assets.”
These 2 answers seem contradictory to me.
Those that have passed or seem to be able to pick the correct strategy consistently, did you have a set of boundaries/rules or did you just go with your gut?