Measures of Risk Aversion Financial Economics Martín Solá October 2010 Martín Solá (FE) Measures of Risk Aversion 08/10 1 / 41 Introduction In this …rst stage we will study the individual decisions of optimal portfolio choice under uncertainty and its consequences in the valuation of risky assets. In short‚ the Financial Theory rests on the no-arbitrage principle. The idea behind this principle is that it is not possible to make pro…ts without risk‚ without initial investment
Premium Risk aversion Risk
distribution or the Fisher - Snedecor distribution ( After R.A. Fisher and George W. Snedecor)(2) which arises in the testing of whether two observed samples have the same variance. (1) Note that three of the most important distributions (namely the normal distribution‚ the t distribution‚ and the chi-square distribution) may be seen as special cases of the F distribution: (3) Example: We want to measure the monthly sales volume from Microsoft and Apple. We collect data for a year ( 12 months). We
Premium Normal distribution Student's t-test
Capsim Success Measures RETURN ON EQUITY (ROE) Formula Description: What Does Return On Equity Tell You? Return on equity (ROE) is net profit divided by total equity. Return on equity tells you how effectively a company is using the dollars invested in it by stockholders. ROE is the most often quoted single statistic when describing a firm ’s performance. It is also one of the statistics considered to be most useful by stockholders. RETURN ON ASSETS (ROA) Formula Description: You determine
Premium Stock market Stock Revenue
The Problem and its Background Rationale Revenue has become the lifeblood of the government from the moment the Philippines had been given the freedom to establish its own system of governance and formulate laws which formally states the people’s rights‚ duties and obligations. However‚ for the country to continuously sustain the needs of its citizens it has to generate revenues from the different sources available. How will the national government
Premium Income Tax Value added tax
CHAPTER I 1.1 INTRODUCTION: Employee welfare is an important facet of industrial relations‚ the extra dimension‚ giving satisfaction to the worker in a way which even s a good wage cannot. With the growth of industrialization and mechanization‚ it has acquired added importance. The workers in the industry cannot cope with the pace of modern life with minimum sustenance amenities. He needs an added stimulus to keep body and soul together. Employees have also realized the importance of their
Premium Laundry detergent
--------------------------------- INFLATIONARY MEAURES IN INDIA ABSTRACT Inflation is a determinant in functioning of any economy. In our country India has mixed economy model that comprises both capitalism and socialism. In our country‚ India uses the Wholesale Price Index (WPI) to calculate inflation rate. Inflation is calculated on a weekly basis. The present day process being used in India has been Wholesale price index (WPI) while several other developed countries adopt the Consumer Price
Premium Inflation
Noneconomic Measures of Development - The relationship between economic and social measures of development is direct and proportional. -Conversely‚ the relationship between social-economic and demographic variables is usually inverse. I. Education - A literate educated labor force is essential for the effective transfer of advanced technology from the developed to developing countries. - The problem in part stems from a national poverty that denies to the educational program
Premium Human Development Index Developed country Developing country
Unemployment as a Measure of Welfare Unemployment‚ as defined in books‚ is a situation wherein a person is jobless but is actively looking for work. To get the unemployment rate‚ we divide the total number of unemployed to the total labor force. Unemployment rate is sometimes used to determine the economic growth of a country. Unemployment has remained high in the Philippines for the past years. Since unemployment means no job‚ it is usually believed to be the cause of poverty. Our government
Premium Unemployment Economics
Review Questions (Chapters 1‚ 2‚ 3 and 7) 1. We have to make choices because: A) we have unlimited income. B) resources are scarce. C) resources are infinite D) with good planning‚ trade-offs can be avoided. 2. The best measure of the opportunity cost of any choice is: A) the monetary cost of that choice. B) whatever you have given up to make that choice‚ even if no monetary costs are involved. C) the cost associated with not taking full advantage of the opportunity offered by that choice
Premium Supply and demand Economics
Paper #5 Final Draft People describe the American dream as being able to start with nothing‚ and‚ through hard work and dedication‚ they are able to call themself successful. This brings to mind‚ however‚ the question of how to measure success in life? In an excerpt from The Norton Anthology of American Literature‚ Booker T. Washington wrote of how he began life as the son of a slave. Nevertheless‚ through hard work and a will to succeed‚ Washington became one of the most revered leaders of the
Premium Theodore Roosevelt Gain William Howard Taft