What is a replicating portfolio, and how is it used to find the valueof a derivative security?

What does it mean that portfolio diversification can reduce risk, and how does the efficient frontier logically fit into this discussion?  include correlation, asset allocation, and asset classes or benchmarks in your answer.

What are the differences between bottom-up and top-down approaches to security valuation? What are the advantages of a top-down approach?

How can an investor eliminate Unsystematic Risk?

Explain the Use of Derivatives to Hedge Portfolio Risk?

Explain about the Hedging against fair value risk.

The no-arbitrage price of Security C?

Determine how the appropriate yield to be offered on a security is affected by a higher risk-free rate. Explain the logic of this relationship. . Determine how the appropriate yield to be offered on a security is affected by a higher default risk premium. Explain the logic of this relationship.

How can an investor eliminate Systematic risk?

Explain Interest Rates and Risk?