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In a few words. The CAPM assume the concave utility function because its, implicitly, assume the validity of mean-variance approach. In utility function way the concavity is related with the concept of risk aversion and risk=variance of return. If utility function is convex the investor is prone to risk and CAPM is not valid and mean-variance as well. If as ...


The general formula for conversion of "a to b" odds to a probability is $p=\frac{b}{a+b}$ So 8/15 remain implies remain with probability 0.652 8/4 for leave implies leave with probability 0.333 The amount 1-0.652-0.333 = 0.0145 represents the bid-ask spread or loss that you suffer (and the other ...


It's 6/4 to leave right now. Hence, the implied probabilities are 6/10 = 0.6 to leave and 8/23 to stay. So it's about 2/3 to leave, 1/3 to stay. You can't do much better, since you don't know number of bets and the profit margin for the venue.

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