that realistic heterogeneity of risk aversion and labor income risk can strongly affect optimal portfolio choice over the …

We show that reaching for yield--a tendency to take more risk when the real interest rate declines while the risk … constraint also affects the response of risktaking to a change in the risk premium, which can even change sign. In a variant of …

Conventional wisdom holds that conservative investors should avoid exposure to foreign currency risk. Even if they hold … risk can be hedged by holding foreign currency if the domestic currency tends to depreciate when the domestic real interest … rate falls, as implied by the theory of uncovered interest parity. Empirically this effect is important and can lead …

be attractive to risk-minimizing global equity investors despite their low average returns. The risk-minimizing currency … little evidence that risk-minimizing investors should adjust their currency positions in response to movements in interest …