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Derive the optimal futures hedge using Taylor approximations.
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- Explain the impact and significance Separation Theorem has when chosing the optimal portfolio.Briefly describe what an investment timing option is and why such options are valuable.Discuss the difference between Systematic Risk and Unsystematic Risk. What kind of strategies wecan use for creating an efficient portfolio?
- Explain risks in Portfolio?What is Sharpe ratio? Show the link between Sharpe ratio and best efficient portfolio.In terms of the Markowitz portfolio model, explain how an investor identifies his / her optimal portfolio. What specific information does an investor need to identify an optimal portfolio?