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- Prove rigourously, "Constant relative risk aversion (CRRA) implies decreasing absolute risk aversion (DARA), but the converse is not necessarily true."How do you use the CAPM model to find the rate of return if you are not given a Beta coefficient? Is it even possible to do so?When npv is negative, the discount rate is greater than the actual return on investment. A. True B. False
- Use a numerical example to illustrate that when there is a large change in the interest rate, the approximation error by using the duration and convexity rule is smaller than the approximation error by using the duration rule only.The most common measure of loss associated with extremely negative returns is A) lower partial standard deviation. B) downfall risk. C) expected shortfall. D) value at risk.Please provide justificationThe probability distribution of a less risky expected return is more peaked than that of ariskier return. What shape would the probability distribution be for (a) completely certainreturns and (b) completely uncertain returns?
- Expected return is best described as ________________________________ and is based on the single word ___?Which of the following is true according to the pure expectations theory? Forward rates:a. Exclusively represent expected future short rates.b. Are biased estimates of market expectations.c. Always overestimate future short rates.Why do some people say that MIRR should stand for Meaningless Internal Rate of Return?