Question
Dimensionality Investment is managing a risky portfolio of stocks. A client, Eugene, had 100% of his wealth in Dimentionalitys risky portfolio. Eugene recently learned that
Dimensionality Investment is managing a risky portfolio of stocks. A client, Eugene, had 100% of his wealth in Dimentionalitys risky portfolio. Eugene recently learned that he lost his job due to the social distancing rule to counter the spread of coronavirus. The portfolio manager reassessed the risk aversion of Eugene and assigned a new value of 4.50. Is Eugene now more willing to take risk than before, according to the portfolio manager? Select one: a. either more nor less, because each individual has a willingness to take risk which does not change over time. b. No, losing job has nothing to do with the investment of his wealth! c. No, because a higher value of the coefficient of risk aversion indicates that Eugene is more willing to take risk. d. No, because a higher value of the coefficient of risk aversion indicates that Eugene is less willing to take risk. e. None of the options.
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