1-Discuss on one page or less the mean-variance metrics associated with Markowitz as a risk management tool. To do that, listen carefully to the Taleb video where he refers to "mean-variance nonsense". Explain what he means by this. Recall and comment about what you learned in Wk 3 about Markowitz.
2-Explain the relationship between the 'characteristic line' and the 'security market line' and then discuss the practical significance of the 'capital asset pricing model'.
3-As the only person in your company with an MBA, the boss asks you to make a twopart elevator speech (well-structured, pithy, and short) about: a-causes and lessons learned from the financial meltdown of 2007-08 b-significance of lessons learned to your business, a 40-employee medical practice. Prepare that elevator speech.
4-Using the #9 (Melloan) and #10 (Morgenson) reading items below, digest the conservative position from Melloan in The Wall Street Journal and the liberal position from Morgenson in The New York Times, as if you are a legislative analyst for a new,
independent US senator. Then, using information from the articles and any other readings in the course, prepare a position paper for her about the issues at hand.
5-You will learn in Wk 6 that bond prices are volatile just like stock prices, that the price changes in bonds are inversely related to changes in interest rates, i.e. when interest rates rise, bond prices fall - and vice versa. It is expected that later this year interest rates will begin to rise. That means that investors holding bonds in their portfolios will see a loss. Suppose you sit on the pension committee in your company, with oversight of a $100 million pension fund. The investment manager you hired to run the bond portion ($75 million) does not intend to hedge against this interest rate risk (rising interest rates causing your bond prices to fall). Discuss how such a hedge might work and the pros and cons of the investment manager's intent.