stochazesthai
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1 answers
4 votes
211 views
Why is $N(d_2)$ not needed for hedging?
Accepted answer
8 votes

The point is the following: Delta, $\Delta$, is defined as $\frac{\partial C}{\partial S}$, where $C$ is the value of the call option, and $S$ is the price of the underlying asset. So, given that ...

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4 answers
6 votes
2k views
Statistics for quantitative finance
6 votes

I think that "An Introduction to Statistical Learning: with Applications in R (Springer Texts in Statistics)" suggested by KarolisR could be useful but too much machine learning oriented. Moreover, ...

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3 answers
4 votes
3k views
Why are investors risk-averse?
Accepted answer
5 votes

Below you find some observations... In CAPM, we assume people are risk-averse and people get compensated for the systematic risk they suffer. The assumption that most people are risk-averse ...

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1 answers
2 votes
113 views
Linear Regession 3 methods different results
3 votes

It is a common problem due to floating point arithmetics. For example you cast variables to double type, whereas Excel uses a limited precision. Here you can find more info about the numeric ...

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1 answers
1 votes
1k views
Calculate total risk
1 votes

Notice that the problem does not give you a risk-free investment, so the computation of the Sharpe ratio becomes: $$SR = \frac{E(r)}{\sqrt{VAR(r)}}$$ Year 1: $r_{p} = E(r) = \frac{1}{n}\sum_{i = 1}^...

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