Explain diversifiable risk and undiversifiable risk
How are diversifiable risk and undiversifiable risk associated with portfolio?
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The contribution from the uncorrelated εs to the portfolio vanishes as we increase the number of assets in the portfolio; it is the risk related with the diversifiable risk. The remaining risk, that is correlated with the index, it is the undiversifiable systematic risk.
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How can we approximately calculate expected incremental cash flows for a proposed capital budgeting project?
What are the Forward and Backward Equations?
Explain the first way of calibration if we can’t measure that parameter.
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Where are Monte Carlo simulations used?
You have one hat containing normally distributed random numbers, with a mean of zero and a standard deviation of σ which is unknown. You draw N numbers φi from this hat. What is the ‘probability’ of drawing all of the numbers &ph
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