The Bond-Stock Mix: A New Insight
28 Pages Posted: 18 Jan 2010 Last revised: 9 Oct 2010
Date Written: September 9, 2010
This paper studies the impact of consumption on the bond-stock mix. Contrary to the existing literature, we allow for an investor who is more risk averse towards consumption than towards wealth. We obtain patterns for the demands for stocks and bonds in terms of investor’s horizon and wealth, which can only be explained by the specific role that consumption plays in investor’s objective.
Keywords: Bond-stock mix, consumption, risk aversion, investment horizon, wealth
JEL Classification: G13
Suggested Citation: Suggested Citation