Question

The concept of human capital risk (check all that apply):

A) Is a risk associated with the present value of all your future wages.
B) Is not correlated with professional competency.
C) Is not correlated with the stock market.
D) Can also be considered as a protection against inflation.

Answer 1

Human capital risk is a concept associated with the present value of future wages, not correlated with professional competency or the stock market, and can act as a protection against inflation.

Step-by-step explanation:

Human capital risk is a concept that can be understood in several ways:

1. It is a risk associated with the present value of all your future wages. This means that the risk lies in the uncertainty surrounding future earnings and potential income loss.
2. It is not correlated with professional competency. Professional competency is a separate factor that affects job performance and career prospects, while human capital risk focuses on the uncertainty of future earnings.
3. It is not correlated with the stock market. Human capital risk is independent of stock market fluctuations, as it relates to personal earnings rather than investment returns.
4. It can also be considered as a protection against inflation. Investing in education and acquiring valuable skills can help individuals maintain their earning power and protect against the erosion of purchasing power due to inflation.