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Okay, this is a bit of an involved question, but the intuition is as follows: As Ross (1976) truly conceived it, being risk-neutral means being indifferent between any gamble and its mean payoff. This is equivalent to linear Von-Neumann Morgenstern preferences over all wealth levels, not just positive ones. A classic experiment to distinguish between ...


I found and answer to my own question. So, I post it here for people who maybe have the same problem. The answer, however, is quite intuitive. The last observation used for the estimation of the physical density is also the time point where the investors know the most about the physical density because at this point the most possible historical observations ...

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