The study re-examines bond valuation and default risk, by considering and relaxing assumptions regarding integer rating migration, and portfolio rating migration, and consequently the implied degree of diversification. A reduced form model, based on (a) rating migration (matrix), serve as basis...

Using data on identical and fraternal twins' complete financial portfolios, we decompose the cross-sectional variation in investor behavior. We find that a genetic factor explains about one third of the variance in stock market participation and asset allocation. Family environment has an effect...

This paper is concerned with the use of currently available technology to provide individuals, financial advisors and pension fund financial planners with detailed prospective financial plans tailored to an individual's financial goals and obligations. By taking account of all prospective cash...

This study develops innovative measures of financial optimism by defining optimism as the overestimation of the favourable outcome in an individual's future financial situation. The paper finds that optimism has a positive influence on an individual's preference for risky portfolios and a...

This paper provides a short overview of the stylized facts of household finance that relate to investors and their investment decisions. Emphasis is given to mistakes made by individuals, although evidence suggests all categories of market participants are prone to the same biases. The paper...

Using longitudinal data from PSID, we show the positive relation between labor income and the equity share of financial wealth is stronger for those who have a higher persistence in shocks to permanent labor income. The results support the hypothesis that the cross sectional variation in...