Hi,
I do not see any difference between the risk profile of Michael Wu in Question 2 (35y Old, Stockbroker, 175K earings, correlated to risky asset returns) and Michael Lee in Question 3 (35y Old, Equity Trader, 175K earings, 0.9 correaltion to S&P500) but they have different asset allocation in the answers.
For the first one, an allocation of 65% Stock 35% Bonds is proposed and 80% Stock 20% Bond for the second.
Is it due to the fact that the Equity Trader is supposed to be less risk adverse than a Stockbrocker? (The answer states behavioral factors and a high risk tolerance for a trader)
I do not see any difference between the risk profile of Michael Wu in Question 2 (35y Old, Stockbroker, 175K earings, correlated to risky asset returns) and Michael Lee in Question 3 (35y Old, Equity Trader, 175K earings, 0.9 correaltion to S&P500) but they have different asset allocation in the answers.
For the first one, an allocation of 65% Stock 35% Bonds is proposed and 80% Stock 20% Bond for the second.
Is it due to the fact that the Equity Trader is supposed to be less risk adverse than a Stockbrocker? (The answer states behavioral factors and a high risk tolerance for a trader)