Answer both parts
Part A:
Critically evaluate the assets that householders can invest in and examine how their attitudes towards risk can affect household portfolio choices. (60 marks).
Part B:
Critically evaluate what is meant by the stock market participation puzzle (SMPP). (40 marks).
Explain and illustrate your answer in no more than 2,500 words. This limit includes tables and captions but excludes footnotes, endnotes, tables of figures and references. Answers that exceed this limit will result in a loss of marks. Full details of penalties for late submission, exceeding the word limit and other information can be found at the end of this assignment.
Student Assignment Guidelines
This assignment is based on Units 1 and 2 of your learning materials. For Part A you should discuss what is meant by assets (financial and real) and explain why it is important to invest in both class of assets. In addition, you should define and discuss risk and why this is important in household portfolio selection. Relevant examples can be used to support and develop your answers. A critical evaluation of the issues raised in the question is needed rather than a descriptive overview.
For Part B you should define what is meant by the SMPP and why this is important when discussing investment planning. The causes of the SMPP should also be included in your answer. Relevant examples can be used to support and develop your answers.
Your assignment must be properly referenced. Further information on referencing (ie the Harvard system) is available in Studying at a Distance by Talbot on the Virtual Learning Environment.
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