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Suppose two investors are the same in all respects except the type of their human capital. Specifically, the first investor has risk-free labor income (bond-like)
Suppose two investors are the same in all respects except the type of their human capital. Specifically, the first investor has risk-free labor income (bond-like) and the second investor has risky labor income (stock-like). At any point in time, would the first investor allocate more of their financial portfolio to equities compared to the second investor? Explain why or why not.
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