• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

CM2 chapter 2

S

shdh

Ton up Member
Hi,

in Question 2.2 part 2 given in the back of chapter 2, colin is having an increasing ARA and RRA, but is written that he is having a decreasing ARA and RRA.

can someone please tell me why so?

Thanks,
Shyam
 
shdh said:
Hi,

in Question 2.2 part 2 given in the back of chapter 2, colin is having an increasing ARA and RRA, but is written that he is having a decreasing ARA and RRA.

can someone please tell me why so?

Thanks,
Shyam
Click to expand...

That's because the question specifically asks for the effects of decreasing wealth. Colin having an increasing ARA and RRA is true when wealth is increasing.
 
Calm said:
That's because the question specifically asks for the effects of decreasing wealth. Colin having an increasing ARA and RRA is true when wealth is increasing.
Click to expand...
So if wealth is decreasing and ARA and/or RRA is increasing then we have to increase our investment in risky assets?

Wealth is decreasing, and ARA is increasing so shouldn't we decrease our investment in risky assets?

By your comment i understand that when wealth is decreasing, then ARA will always decrease. is it so? if so then please do tell me why?
 
You must log in or register to reply here.
Back
Top