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For questions citing or requesting references to academic and/or professional research.

0 votes

Modelling NPV with negative cashflows?

Yes, absolutely. It makes no difference to the NPV framework whether you look at opportunity costs and benefits rather than absolute or net cashflows. The tricky thing here is what you then mean by th …
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10 votes

Who hedges (more): options seller or options buyer?

Your question comes at this correctly, in my opinion. There is indeed a buyer and a seller behind every option; but the hedging behaviour of the two need not be equivalent... I used to work in an inve …
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2 votes

0.0006 r-squared after trying to test whether the intercepts differ significantly. Did I do ...

No, that's right! One fund has a beta of 81.6% and the other 82.4%, each with a ~90% R^2 to market. Therefore, it makes total sense that the spread between the two should have almost no correlatio …
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2 votes

Why should there be an equity risk premium?

This one is far from straight-forward, although bear with me. It is possible to infer from first principles an ERP reasonably close to normative consensus expectations. The attached from Howard Mark …
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