Question: Under the social security system in the United States, workers pay taxes and receive a monthly annuity after retirement. Some have argued that the United
Under the social security system in the United States, workers pay taxes and receive a monthly annuity after retirement. Some have argued that the United States should invest the social security tax proceeds in stocks. The rationale is that, over time, there is a decreasing probability that stocks will underperform bonds. The social security system would thus benefit from the higher expected return on stocks. Making use of the put-pricing discussion in Section 22.6, comment on this proposal.
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