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| Author: | Lindset, S. Matsen, E. |
| Title: | Human capital investment and optimal portfolio choice |
| Journal: | European Journal of Finance
2011 : AUG-SEP, VOL. 17:7-8, p. 539-552 |
| Index terms: | portfolio selection portfolio management human capital investment hedging demand models |
| Freeterms: | life cycle wealth option value |
| Language: | eng |
| Abstract: | In this article they examine the decisions of a life-cycle investor who can invest in his/her own human capital, as well as financial assets, namely analyze how an individual should optimally invest in human capital when he also has financial wealth. They treat the individual's possibilities to take more education as expansion options and apply real option analysis. In addition, they characterize the individual's optimal consumption strategy and portfolio weights. The individual has a demand for hedging financial risk, labor income risk, and also wage level risk. |
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