What is a mathematical definition of risk
What is a mathematical definition of risk?
Expert
A starting point for a mathematical definition of risk is simply as standard deviation. It is sensible due to the results of the Central Limit Theorem (CLT), that when you add up a large number of investments what matters so far as the statistical properties of the portfolio are only the expected return and the standard deviation of individual investments, and the resulting portfolio returns are certainly normal distributed.
The normal distribution being symmetrical regarding the mean, the potential downside can be measured in order of the standard deviation.
What are the actions to be taken when the analysis of pro forma financial statements shows positive trends or Negative trends?
Describe the basic operation of a currency forward market The forward market is an OTC market in which the forward contract for purchase or sale of foreign currency is tailor-made among the client and its international bank. No money changes ha
Explain normal distribution model proposed by Louis Bachelier.
What is forward equation?
What are the Forward and Backward Equations?
What is Gamma Hedging?
Financing costs included into the capital budgeting analysis process. Explain.
Explain in brief the non-diversifiable risk and ways to measure it?
What is the probability of probabilistic concepts occurrence in distribution?
For equities the standard model is the lognormal model, if there are many more ‘standard’ models within fixed income. Does it matter?
18,76,764
1939716 Asked
3,689
Active Tutors
1415686
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!